New Delhi: US President Donald Trump took an unexpected step on Wednesday. He stopped the reciprocal tariff imposed on most countries. He has given a 90-day grace period to more than 75 countries. But, he has given a big blow to China. Trump has increased the tariff on China to 125% with immediate effect. Trump says that this decision had to be taken due to the disrespect shown by China. This news led to a boom in the stock market. There was a huge jump in S&P 500, Nasdaq and Dow. Trump has made it clear that this is not a U-turn, but a strategic change. China will have to face American action. Trump says that China wants to make a deal. But, it does not know how to do it.
Trump has described China as the main opponent in the trade war. He has accused China of currency manipulation, IP theft and flooding the world with cheap goods. White House Press Secretary Caroline Levitt said that China has become aggressive. Trump's focus is not just on economics. Of course, it is also personal, strategic and psychological. His goal is to isolate China and bring allies with America. Levitt said that the world is calling America. Not China. The reason is that it needs our market.
Why did Trump show mercy to the rest of the world?
The answer to this is hidden in the growing concern in the US Treasury Department. According to CNN, Trump had to take this decision due to the huge fall in the bond market. Trump said, 'The bond market is in a lot of trouble, I was watching it.' He also said that people were getting a little nervous.
Treasury Secretary Scott Bessant said that this was Trump's strategy. He pushed China into a wrong position. But, Trump later denied this. Trump admitted that he had to think again due to instability. He said that people were getting a little nervous. They were a little scared. You have to be flexible.
Gennady Goldberg of TD Securities said that this is relief news for India. Trump had imposed 26% tariff on Indian goods, which caused concern in the Indian market. Now with temporary relief, hopes have increased. Foreign Ministry spokesperson Randhir Jaiswal said that India and America are strong partners. He hoped that a trade agreement will be reached between the two countries soon.
China has reacted strongly to this. China's Commerce Ministry has warned that China will retaliate if the US increases trade sanctions. China can target American companies.
What will happen in 90 days now?
Now in 90 days, the US will make agreements with those countries that did not retaliate. Besant said that the US will negotiate honestly. Negotiations are going on with Japan, Vietnam, South Korea and India. But, China will be treated differently.
Trump thinks that Xi Jinping will bow down to pressure. But experts doubt this. Daniel Russell of the Asia Society Policy Institute warned that China considers concessions as weakness.
Trump's strategy is to reduce pressure on allies and increase pressure on China. This is a risky move that can change global trade. On the one hand, he is strengthening American leadership. On the other hand, he is increasing economic tensions with China.
Wall Street is happy, but the fight is not over yet. Trump said, sometimes the conversation does not happen until it happens. This decision of the Trump administration has caused a stir in markets around the world. Some countries have got relief, while some countries are worried. The coming 90 days will be important. It remains to be seen whether Trump's strategy succeeds or not.
America wants to bring China to its knees
Trump has taken shocking decisions many times before. But, this time he has directly targeted China. This can further increase tensions between the two countries. Trump believes that China is involved in unfair trade practices. He is trying to change China by putting pressure on it. But, China is not ready to bow down. It is threatening to retaliate.
This trade war will affect economies around the world. Consumers will have to buy expensive goods. Companies will suffer losses. Global growth will slow down. The Trump administration will have to think about the consequences of this trade war. They will have to move towards an agreement by negotiating with China. This will benefit both countries and the world.
Opportunity for India, but one has to be careful
This is a good opportunity for India. It can increase its exports by entering into a trade agreement with America. This will strengthen the Indian economy. But, India will have to maintain its relations with China as well. China is an important trade partner of India. India will have to maintain balanced relations with both the countries. This decision of Trump is a gamble. It remains to be seen whether this gamble succeeds or not. But, this gamble will have an impact on the whole world.
The 125% tariff imposed by Trump
Or it is too much. This will cause huge losses to China's exports. China will be forced to retaliate. China has many options. It can increase tariffs on American goods. It can target American companies. It can stop the export of rare minerals. If China retaliates, the trade war will increase further. This will further harm economies around the world.
