Observation: There are indications that Trump may be preparing to withdraw the tariff measures

Facing the volatile Treasury bond market, the call for the United States to withdraw from the trade war has become louder this week. It seems that the United States has extended an olive branch to China, hoping that China will return to the negotiating table and offer deals ranging from respecting its economic achievements to proposing a "beautiful rebalancing" of the world economy. This is far from the previous accusation of "plundering and looting".

​​​​​​​A big battle?

But the larger background still exists. Will the United States take advantage of this trade war to try to pull the rest of the world to its side in the major war with China? If this is the focus of all strategies, it seems surprising that it has angered Allies so significantly and fundamentally. One test case here is Spain, which faces a 20% tariff as a member state of the European Union.

Spain was the fastest-growing developed economy last year and is expected to remain so this year. It is also the only developed economy whose growth forecast has been raised by the International Monetary Fund. It is based on green energy, the entry of foreign workers, tourism, as well as significant investment and technology transfer from China. The United States expressed dissatisfaction with this visit and had a "frank" discussion with its Treasury Secretary Carlos Cuerpo.

Carlos Cuelbo seemed unwavering. He told me at the Semafor World Economic Summit in Washington: "(Spain) has a huge trade deficit with China. We need to correct this by opening up to China and attracting Chinese investment, of course, within the framework of overall economic security." This can only be achieved through contact and actual dialogue with the Chinese authorities.

Spain has achieved remarkable results from China in terms of investment in electric vehicle factories and technology transfer. The United States is not satisfied with this. If the United States wants to persuade Spain and the European Union to maintain its long-term reliable ally status in the fight against China, it is difficult to see this strategy in the tariff accusations and chaos over the past month.

No matter who wins the Canadian election, it will firmly bring this G7 economy back to the debate of this global change. Will the newly elected Prime Minister of Canada also start comprehensive negotiations with the United Kingdom? Then he will chair the G7 summit to be held in Canada in June, when President Trump's 90-day term will expire. It is speculated that Donald Trump will travel to Alberta, a place he claims should be part of his own country.

There is a path leading to trade peace, calmness and de-escalation of conflicts. But the situation could also get worse. These are crucial weeks for the world economy.

There is a reason why China behaves like an exception

In response to the "reciprocal tariffs" announced by Trump on the 2nd, China launched a series of prompt and resolute countermeasures on the 4th, including imposing a 34% tariff on all imported goods originating from the United States starting from 12:01 on April 10th.

This made Trump "break his defenses" and roared on his self-created Social media platform "Truth Social" on the 4th. On the 7th local time, Trump threatened again that if China did not lift the 34% retaliatory tariff, an additional 50% tariff would be imposed on China. His threat was firmly opposed by the Ministry of Commerce of China. A spokesperson for China's Ministry of Commerce said on the 8th that the so-called "reciprocal tariffs" imposed by the US on China are groundless and a typical unilateral bullying act. The countermeasures that China has taken are aimed at safeguarding its own sovereignty, security and development interests and maintaining the normal international trade order, which is completely legitimate. The US's threat to escalate tariffs on China is making a mistake on top of a mistake and once again exposes the nature of the US's blackmail. China will never accept this. If the US side insists on going its own way, China will surely stand by it to the end.

Tutsi said that Trump does not believe those predictions that "if he makes crazy moves, the sky will fall", because his previous crazy actions did not cause the sky to fall, at least not completely.

Many of the outrageous things Trump did during his first term did not bring serious consequences to the United States. When he imposed visa restrictions and travel bans, few countries took serious reciprocal measures against Americans. His decision to have the United States withdraw from the Iran nuclear deal and resume the sanctions against Iran that were exempted due to the Iran nuclear deal did not prompt Tehran to immediately manufacture nuclear bombs. Tutsi pointed out that this made Trump feel that he could attempt or even undermine any system without punishment.

Tutsi said, but all these decisions come at a cost. Perhaps it will be several years before the consequences of Trump's actions become apparent. When countries debate how to deal with Trump's tariffs, the most painful ones may not be Trump himself, but his fellow Republicans, especially those members of Congress who have the ability to prevent and revoke these tariffs. Sooner or later, they will feel sufficient voter pressure and their dwindling savings, and will take action against the president.

Even if this day comes earlier than expected, one thing is certain: One of the biggest costs of Trump's trade war is the trust that other countries have in the United States as a stable and reliable pillar of global trade.

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