Both the White House and the Chinese government should be commended for agreeing to slash more than a hundred percent tariffs, judged unbelievable and unsustainable. Also, the agreement on a 90-day pause, while negotiations continue, leaves the door open to the possibility of achieving a more substantial agreement between the two largest economies in the world. The 3.3 percent bounce in the S&P 500 index indicates that investors are hopeful.
However, despite these positive results, the uncertainty in the US economy continues, mainly because of the erratic and unpredictable decision-making style emanating from the White House. For instance, some recent statements reveal an ominous preference for price controls, as in threatening Walmart for saying that it may have to increase prices because of the tariffs. President Trump said Walmart and China “should eat the tariffs,” instead of increasing prices. In the same sense was the suggestion that if the tariffs generate shortages of goods, children should conform themselves with “two dolls” and “five pencils” and perhaps pay “a couple of bucks more.”
Besides feeding on the uncertainty, such statements contradict the fact that the White House has retreated twice from its originally ambitious tariff objectives. This augurs well for the possibility that the whole tariff experiment may end positively.
*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.