US: Trump is backpadeling further – Commerzbank

And the backpedaling continues. In addition to the three-month tariff pause, the US government has now also expanded its list of goods exempt from reciprocal tariffs. This now includes all kinds of electronic goods. The US Secretary of Commerce pointed out that the exemption is only temporary and that the products will soon be subject to sectoral tariffs. However, it can be assumed that these will be lower than initially planned, especially for the most important supplier, China, Commerzbank's FX analyst Thu Lan Nguyen notes.

Trump under pressure to rethink trade tactics

"There is a growing suspicion that Trump is not only giving in to pressure from the markets, but also from individual voices of affected US companies. They seem to have made it clear to him that ‘Made in the USA’ is not as simple as the tariff enthusiasts had imagined. Apart from obvious factors such as lower wages, it is the availability of skilled labour that has made China the world's workbench."

"The US leadership's recent relenting - at least as far as tariffs against China are concerned - is a further indication that Trump is showing some understanding. If US economic momentum slows significantly over the next three months, there is a chance that he will distance himself further from the tough tariff policy. This is initially good news for the US dollar, even if the market does not really believe it at the moment."

"I believe that the US government's current favoured tools to reduce the US trade deficit will not be effective. That would leave one other remedy: a weaker US currency. Irrespective of how this weakening would take place: Through a coordinated intervention by the major central banks (a new Plaza Accord, so to speak) or through the continued erosion of the dollar's status as a safe haven — a ‘rebalancing’ of foreign trade through an exchange rate devaluation, especially if it is not only strong but also occurs in a very short amount of time, is also associated with economic pain."