Why the tariff drama has stalled for a while

The tariff drama directed by US President Donald Trump has stalled. On Wednesday, he announced a ninety-day pause in all tariffs imposed across the board for most countries in the world, with the exception of China – in its case, he raised tariffs to 125 percent.

What does this turnaround mean for the world? Despite the suspension of tariffs, the "affected" countries must seek an agreement with Washington if they want to maintain access to the US market. The well-known columnist Fareed Zakaria used an interesting analogy in this context: governments that want to negotiate "have to kiss the ring in Washington". And political scientist Francis Fukuyama added that this style of politics is pushing the US closer to authoritarianism.

However, negotiations will probably not be easy at all when such a large number of countries are involved. It cannot be expected that they will unite in an organized way. Here, the European Union may perhaps have a certain advantage. However, negotiations must take place directly with Trump, because according to The Economist, he has become the sole guardian of trade with America. The finance and trade ministers and his advisers may be extras.

The postponement of tariffs may indicate that Trump has come to terms with economic and geopolitical realities. American business was caught off guard by the "tariff raid," and even Trump's confidant Elon Musk rebelled against it. Trump may also have been watching with concern the threat of a situational anti-American alliance between China and the EU. It was foreshadowed by a phone call between European Commission President Ursula von der Leyen and Chinese Premier Li Keqiang, as well as retaliatory tariffs from China and the EU. And when Japan began selling US government bonds en masse, something had to be done.

The idea that a drastic 125 percent tariff would force China to make concessions is not very realistic. It is a clash with Chinese pride – China is now remembering how Western powers subjugated and colonized the country during the Opium Wars. Today, it is referred to as "100 years of shame". It is no wonder that the Chinese Foreign Ministry has declared that "China is ready to fight to the end in a trade war."

And then there are economic factors: China has diversified its export market in recent years, so that the United States remains its largest market, but its share of Chinese exports has fallen significantly. And Chinese manufacturers are so dominant in some sectors that American retailers will have a hard time finding alternatives in the short term. Beijing has also indicated that it may limit exports of rare earth metals to the US, which are essential for the production of chips and weapons. At the same time, it now controls seventy percent of their global production.

The scope for a tariff war in a multipolar world where the United States no longer has a completely dominant position in everything is so limited. But Trump may still not be taking this fact seriously.

Miloš Balabán, Právo Daily