A deal will be worked out with China to reduce the tariffs. The chairman of the Federal Reserve won’t be fired. Over the last 24 hours, President Trump has softened his stance on two key planks of his economic policy. It is not hard to work out why. For all the bluster, Trump is ultimately a pragmatist – and that makes him a president the financial markets will live with.
The financial markets have soared today, and the dollar has recovered, while gold, the safe haven in troubled times, has dropped by $100 an ounce. The reason? A dramatic shift in American policy. In China, the escalating trade war had reached the point where there was an effective blockade on trade between the world’s two largest economies, with US tariffs hitting 145 per cent on Chinese goods, and US exports in the other direction facing levies of 125 per cent.
