On Wednesday, President Donald Trump announced that he wanted to “substantially” reduce tariffs on Chinese products, which had been set at 145 percent after the trade war’s recent escalation. Treasury Secretary Scott Bessent had already announced the potential détente, explaining that the Unites States’ trade war on China was “not sustainable” for either country.
These announcements have not yet led to an actual reduction in trade barriers, and Chinese president Xi Jinping denies that any negotiations have taken place. Nevertheless, Trump’s remarks represent a significant shift by his administration, which is primarily seeking to reassure financial markets and investors. With the trade war exacerbating internal tensions and contradictions in the United States, the president is attempting to regain control of the narrative amid the crisis of confidence caused by his erratic policies and unpredictable U-turns.
A Tactical Reversal and Internal Contradictions
This effort to reassure investors and restore confidence in the economy comes as the U.S. stock market has experienced its worst start during a presidential term in the last century, with the S&P 500 declining by about 14 percent. The Trump administration’s erratic announcements and widespread tariffs against all trading partners have caused a genuine crisis of confidence in the global economy — particularly in the U.S. economy — despite a 90-day suspension.
As a symptom of the global turmoil caused by Trump’s trade war, the IMF has revised its global growth forecast for 2025 from 3.3 percent in January to 2.8 percent. The dollar’s value has fallen significantly in recent weeks, another sign of the crisis of confidence shaking the United States. Despite historically high interest rates — 30-year Treasury bonds are hovering around 5 percent — the U.S. currency has dropped to its lowest level in three years. This counterintuitive phenomenon reveals the depth of the debt crisis and, ultimately, the weakness of the U.S. economy. Another strong indicator: on Monday, one of Japan’s largest pension funds, renowned for its stability and its balanced portfolio, sold more than $20 billion of U.S. debt in a single day.
This mistrust of the U.S. economy is particularly embarrassing for Trump, given that the U.S. budget deficit and the impending maturity of Treasury bonds are forcing the U.S. to take on $8 trillion in public debt this year. Faced with market turmoil, especially in the bond market, where U.S. government debt is bought, Trump has been compelled to ease the pressure he has been putting on Federal Reserve chair Jerome Powell for several weeks.
While the Trump administration indicated last Friday that it wanted to remove Powell from office after the Fed repeatedly refused to lower its key interest rates, it was forced to back down on Tuesday to reassure the markets. Confronted with persistent inflation, which is expected to rise further with the tariffs, Powell is maintaining a cautious stance, refusing to align the Fed with presidential policy. Trump’s threats at the end of last week to bring the Fed under his control only exacerbated the panic in the markets, which opened sharply lower on Monday morning. U.S. and foreign investors view any questioning of the central bank’s independence as a threat to monetary credibility.
This crisis of confidence is reflected in the weakening of the dollar. Combined with rising government bond prices, it highlights a broader phenomenon: the U.S. risks fueling significant internal economic and political contradictions by attempting to reshape the global economy to safeguard its hegemony.
A Two-Pronged Approach: Negotiating while Increasing Leverage
While Trump is temporarily loosening the screws to try to avoid a major financial crisis, he is not letting up on the trade front. Alongside its conciliatory statements in recent days, the U.S. administration announced massive new tariffs on Monday on solar panel imports from Southeast Asia, with duties of up to 3,521 percent for certain Cambodian producers. Officially justified as a measure to combat Chinese dumping via third countries, these tariffs are actually aimed at the heart of one of the main centers of industrial overproduction driven by Beijing. By targeting production chains relocated to Southeast Asian countries, Trump intends to increase pressure on China.
China, for its part, seems unwilling to concede without receiving something in return. Beijing has reaffirmed that discussions remain possible, on the condition that the U.S. first cancel all its unilateral surcharges. Washington rejects this demand, insisting that de-escalation must be bilateral. This impasse reflects the core of Trump’s protectionist policy: maintain the balance of power while using negotiations as a pressure tactic. Economic blackmail remains central to the White House’s strategy, which alternates between gestures of détente and tariffs while remaining indifferent to the plight of American workers, who must pay for these protectionist measures.
Should negotiations fail, the “de-escalation” could be only temporary before Trump launches a new offensive. In any case, his policy threatens to escalate confrontation between the U.S. and China while exacerbating tensions in the financial markets. This will only accelerate reactionary tendencies at work everywhere — particularly in Europe, where the continent’s imperialist powers have launched a vast arms race and are preparing to make workers pay for the crisis initiated by Trump’s plan to reorganize the global economy. These countries are imposing unprecedentedly brutal competitiveness measures, squeezing wages, and slashing public services to finance militarization and rearmament.
In this context, it is of utmost urgency to build an internationalist response. U.S. and Chinese workers are not our enemies. By confronting our own rulers and undermining the agendas of our ruling classes, we can send a strong message: that the interests of our leaders do not align with ours, and that workers and oppressed sectors in China and the U.S. are not our allies. This internationalist demonstration would undermine the nationalist and warmongering rhetoric of both Beijing and Washington, and it could pave the way for mobilizations against the reactionary regime in Beijing and against the White House.
To begin laying the foundations for this united response against the militarization of Europe and against the ultrareactionary projects of the international Far Right and its Trumpist vanguard, Révolution Permanente and other organizations of our International, the Trotskyist Fraction-Fourth International are calling for a large internationalist meeting on May 24 at the Espace Charenton in Paris, featuring Myriam Bregman and our German and U.S. comrades from Left Voice. We will advocate an internationalist perspective, the only orientation that can halt the extremely dangerous tendencies toward war and militarization on the continent.
Originally published in French on April 24 in Révolution Permanente
Translated and adapted by Otto Fors