Politics: escalation

By Richard North - April 9, 2025

I think the idea of Trump’s tariffs being a “flash in the pan” is well past its sell-by date, and it doesn’t look as if the US president will be influenced (at least, not in the short-term) by stock market movements, which are on their way downwards after a brief rally following expectations that there might be negotiations between the US and China.

That expectation, as most of headlines today attest, has not been realised with the Financial Times setting out the state of play, telling us: “Donald Trump to proceed with extra 50% tariff on China as trade war escalates”.

The sub-head conveys the ominous news that the additional tariffs are to start today which Beijing warns that it will “fight to the end”. Whether he wanted one or not – and the indications are that he did – Trump has got his trade war, big time.

The New York Times conveys the bad news on the markets, its headline declaring: “Markets slide again in afternoon slump as trade tensions escalate” – one of the many papers to use the “E” word. The military equivalent by now would probably be Defcon 2 with the missiles warming up in their silos.

The stock market movements on Wall Street, though, do not seem to be quite as extreme as they have been over the past week, as the early rally flattered the figures, leaving the S&P 500 index a mere 1.6 percent down, after the White House reaffirmed plans to impose its higher tariffs on China.

The Guardian news team has been working its cotton socks off, delivering a long piece with the headline “Trump confirms 104% tariffs on Chinese goods as part of unfolding global trade war”, it too is telling us that Beijing is vowing to “fight to the end”, even as the US president is claiming that “many” countries are seeking a deal.

There is no equivocation in the opening paragraph of its text, as it seeks to assert the stark reality: “Donald Trump is poised to unleash his trade war with the world on Wednesday”, it says, “despite fears of widespread economic damage and calls to reconsider”.

As to whether there is any sign of Trump backing off, White House press secretary Karoline Leavitt helpfully reminds us that “President Trump has a spine of steel and he will not break”, adding that “America will not break under his leadership”.

Nevertheless, Elon Musk, described by the Guardian as “the billionaire Trump adviser” is apparently having cold feet and has reportedly asked the president to reverse course. Conservative businessmen Leonard Leo and Charles Koch have taken more robust action, having filed a lawsuit against what they call the “illegal” tariffs.

Some hint of China’s displeasure comes in a “scathing editorial” from the official state news agency, Xinhua. It accuses Trump of “naked extortion”, dismissing the “utterly absurd” underlying logic of the United States which, it says, “can hit you at my will, and you must not respond. Instead, you must surrender unconditionally”. Not mincing its words, it adds: “This is not diplomacy. It is blunt coercion dressed up as policy”.

In the Telegraph, there is an interesting “take” from economics editor Szu Ping Chan, under the headline: “Trump wants to break China. He may drive the world into its arms”, with a sub-head which asserts: “Washington’s trade war risks undermining alliances and empowering Beijing”.

That is rather the view of the Financial Times which is calling Trump’s tariffs on south-east Asia “self-defeating”, warning that: “Forced to choose between the US and China, the likes of Vietnam may opt for Beijing”.

Chan, on the other hand, argues that America and China are on “a collision course” anyway, noting that China was mentioned 867 times in the US’s latest report on Foreign Trade Barriers that Trump brandished with glee in the Rose Garden on “liberation day”. Almost 50 pages of the 400-page report, she says, are devoted to detailing China’s laundry list of wrongdoing, from currency manipulation to intellectual property theft.

One effect of the Sino-US “collision”, it seems, is that China’s “frosty relationship” with the EU is slowly thawing. Chan reports that Ursula von der Leyen held talks with China’s premier Li Qiang yesterday, where both parties “stressed the responsibility of Europe and China, as two of the world’s largest markets, to support a strong reformed trading system, free, fair and founded on a level playing field”.

This is borne out by a report from Xinhau which also has Li Qiang assuring von der Leyen that China is “ready to work with the European side to promote the sound and steady development of China-EU relations”. On the 50th anniversary of diplomatic ties between China and the EU, “the development of bilateral relations faces important opportunities”, he says.

The New York Times is also watching the EU closely, describing its strategy as responding with a “handshake and a punch”, telling us that Europe wants to negotiate, but it is also trying to project strength. “It’s a gamble”, the paper says, as Trump has warned nations against retaliation. The strategy “could be perilous”.

As to the UK response, officially this remains muted, with Rachel from Accounts making “brief comments” to the House yesterday.

She had, she said, spoken to the Governor of the Bank of England, who had confirmed that markets were “functioning effectively and that our banking system is resilient”, then adding that a trade war was “in nobody’s interests” which is why “we must remain pragmatic and cool-headed, and pursue the best deal with the United States in our national interest”.

She declined to back calls from Lib- Dems for the government to launch a “buy British” campaign. “In terms of buying British, I think everyone will make their own decisions”, Reeves said. “What we don’t want to see is a trade war, with Britain becoming inward-looking”.

From this, it doesn’t seem that clear as to whether little Rachel fully understands what is going on, and that we already embroiled in the mother of all trade wars, which promises to be the most intense example of a trade war since trade wars began. “Security for working people, renewal for Britain”, she bleats. “That is our focus, and that is what this Government will deliver”.

Once again, it takes the New York Times to spell out the reality with a piece headlined: “Trump’s tariffs are already reducing car imports and idling factories”, reporting that a few carmakers have closed factories, laid off workers or shifted production in response to the auto tariffs that took effect last week.

Jaguar Land Rover has paused its exports to the United States. Stellantis has idled factories in Canada and Mexico that make Chrysler and Jeep vehicles and laid off 900 US workers who supplied those factories with engines and other parts. The luxury division of Volkswagen has similarly paused exports of cars to the United States from Europe. And, says the paper, “if other carmakers make similar moves, the economic impact could be severe, leading to higher car prices and widespread layoffs”.

This is only the start, in one sector-specific area with many more to follow, which has the Telegraph lead its coverage by highlighting the rifts developing in the Trump team, having Elon Musk brand Trump’s tariff guru “dumber than a sack of bricks”.

The paper asserts that the “Maga coalition is cracking as Tesla founder calls Peter Navarro ‘a moron’”, this feud being indicative of “mounting tensions within Mr Trump’s inner circle”.

It is not only the “inner circle” that is having wobbles, though. The Washington Post is telling us that “Hill Republicans worry about Trump’s tariffs and nudge him to negotiate”, the sub-head having one GOP senator “not reassured” by Trump’s trade representative, while another asks: “Whose throat do I get to choke if this proves to be wrong?”.

Sen. Ron Johnson tells the WaPo that he was not reassured by the president’s trade representative, Jamieson Greer, in a Finance Committee hearing, and doesn’t think many Republicans were. “I don’t quite understand the strategy,” Johnson says, “and I’m not sure anybody else does”.

For all that, the Musk spat doesn’t seem to be having much impact on the White House. Karoline Leavitt, the ever-present White House press secretary, downplayed the infighting by claiming that “boys will be boys”.

“These are obviously two individuals who have very different views on trade and on tariffs,” she told reporters. “Boys will be boys, and we will let their public sparring continue”, adding: “And you guys should all be very grateful that we have the most transparent administration in history”.

Personally, I’m not so sure about the transparency, but one can certainly say this administration is different, led by a president who is either mad as a box of frogs, or endowed with a degree of cunning of which Machiavelli could only dream.

Which of the two, I don’t believe it matters – the outcome would probably be the same, shaking up the world order to an unprecedented degree. It might not be advisable though to invest in frog futures.