Should we quote Sun Tzu again: "Strategy without tactic is the longest road to victory. Tactic without strategy is the noise before defeat!" Here we have a subtle mix of both. Outrageous demand to finally settle on an advantageous agreement, may be "The Art of the Deal" but in international politics the law of unforeseen consequences will strike long before the expected favourable results are a reality.
The fact is that the US will find it extremely difficult to refinance its maturing debt of close to 10 trillion dollars by the end of 2025 at the current interest rates. These rates must therefore come down. But how do you do that short of a massive recession? Well, Europe is already in a recession. Growth in China likewise is rather anaemic. As for the US, they will enter a recession when the FED says that they are in a recession which usually is 6 to 9 months after the numbers have turned south. So whatever happens before the end of the year, and a lot will happen, no doubts about it, the US should announce that the economy is shrinking by Summer and at the vary latest early Fall. But by then, let's hope we're not in a depression!
Bessent says he expects ‘de-escalation’ in U.S.-China tariff fight in the ‘very near future’:
Treasury Secretary Scott Bessent told investors in a closed-door meeting Tuesday he expects “there will be a de-escalation” in President Donald Trump’s trade war with China in the “very near future,” a person in the room told CNBC.
“No one thinks the current status quo is sustainable” with tariff rates at their current levels, Bessent said at a private investor summit in Washington, D.C., hosted by JPMorgan Chase.
Via: Daniel Lacalle:
Global container booking volumes fell by 49% between the last week of March and the first week of April 2025, according to Freight Waves. Imports from China to the United States collapsed by 64%, with imports of apparel and textiles declining by a whopping 59% and 57%, respectively. The figures coming from shipping companies are worse than those seen during the Covid-19 crisis.
These alarming figures suggest that importers are unwilling to accept higher prices in the middle of a tariff war, that exporters cannot simply choose to move their products elsewhere easily, and that the excess capacity in many sectors is much larger than initially expected.
No one wants to accept the cost of tariffs, and this means that the only option for the economies with elevated productive overcapacity is to negotiate a trade deal, and quickly, or face an economic depression.
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