We’ve learnt three things about the future of world trade from the temporary reprieve over tariffs that the US has given China – and China’s response to it.
One is the markets are now confident that both countries will be sensible. The massively negative reaction they gave to ‘liberation day’ on 2 April signalled their hatred of uncertainty but also of stupidity. Before Donald Trump’s arbitrary jacking up of tariffs to what were really absurd levels, they had assumed that he would ensure that there would be reasonable continuity of world trade. His plans, and China’s robust reaction, led to nagging doubts that their assumption might be wrong, there really would be a destructive trade war between the world’s two biggest economies.
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