Trump folds on tariffs again…

…because of course/why not? 

The BBC reports US bonds being dumped, pushing up interest rates (Trump’s other obsession). Then CNN…

President Donald Trump announced a complete three-month pause on all the “reciprocal” tariffs that went into effect at midnight, with the exception of China, a stunning reversal from a president who had insisted historically high tariffs were here to stay.

But enormous tariffs will remain on China, the world’s second-largest economy. In fact, Trump said they will be increased to 125% from 104% after China announced additional retaliatory tariffs against the United States earlier Wednesday. All other countries that were subjected to reciprocal tariff rates Wednesday will see rates go back down to the universal 10% rate, he said.

This would all be quite funny except there are shippers offloading containers mid-voyage to stop them reaching the US. Insiders must be making a killing shorting then buying the stock market.

The Hong Kong Accountability Archive has been launched – a searchable archive of videos on police actions during the 2019 protests.

William Pesek in Asia Times notes that both China and the US (not to mention dozens of other countries) are heading for bigger problems if the trade war continues…

Xi’s China is calling Trump’s bluff in ways Bessent and Trade Representative Jamieson Green clearly didn’t expect. And upping the odds that a clash of the titans in Washington and Beijing might lay waste to the global financial system.

Here, the US should be careful about what it wishes for. Neither nation is as ready for this economic brawl as their respective policymakers seem to project.

A Fitch Ratings downgrade last week reminded investors that China isn’t in a state-of-the-art financial position. Fitch downgraded China’s sovereign rating to ‘A’ from ‘A+’ amid concerns about shaky public finances.

“The downgrade reflects our expectations of a continued weakening of China’s public finances and a rapidly rising public debt trajectory during the country’s economic transition,” says Fitch analyst Jeremy Zook.

Zook adds that “in our view, sustained fiscal stimulus will be deployed to support growth, amid subdued domestic demand, rising tariffs and deflationary pressures. This support, along with a structural erosion in the revenue base, will likely keep fiscal deficits high.”

At the same time, Zook notes, “we expect the government debt/GDP to continue its sharp upward trend over the next few years, driven by these high deficits, ongoing crystallization of contingent liabilities and subdued nominal GDP growth.”

In other words, China has fiscal space to protect its 5% growth. But it’s not unlimited and deploying the stimulus “bazooka” yet again could come at a high cost in the long run.

The US, meanwhile, is carrying a US$36 trillion-plus national debt into this fight as recession talk heats up. Even worse is the self-inflicted nature of the US reckoning to come, one punctuated by a $10 trillion stock market loss so far.

As Mark Zandi, chief economist at Moody’s Analytics, notes, it “feels like we’re being pushed into recession – it’s recession by design.”

Dexter Roberts quoting Ryan Hass…

If Trump really believes China is panicking rather than instead showing their readiness to wage trade war, he is in for a rude surprise. Beijing has been preparing for this day for a long time, including by strengthening legislation to punish foreign firms and diversifying its reliance on agricultural goods and other essential products.

“Anyone expecting President Xi to come calling and seek a call with President Trump following [the] April 2 tariff announcement is being dangerously naive. Anyone advising Trump that Xi will beg for forgiveness is committing malpractice. That is not the mood or the plan in Beijing now,” writes Brookings scholar Ryan Hass.

Don’t miss the cum Police exhibition…