April 10 2025

EU Pauses Retaliatory Tariffs for 90 Days as Trump Reverses Global Levies, but U.S.-China Trade War Intensifies

1944-1991: Bretton Woods and How U.S. Trade Supremacy Shaped Cold War Victory Over the Soviets

1991-2016: Free Trade Boom Backfires and How the China Shock Devastates U.S. Manufacturing Heartland

2016-2024: Populist Revolt Against Globalization Reshapes Trade as Trump Pushes ‘America First’

Trump’s Tariff Suspension Sparks Record Market Rally, Signals Cold War 2.0 Strategy Against China

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Today’s newsletter is dedicated to putting yesterday's tariff pause (the 2nd world historical event in a week!) in context of the last 80y

1. EU Pauses Retaliatory Tariffs for 90 Days as Trump Reverses Global Levies, but U.S.-China Trade War Intensifies

The European Union will pause its retaliatory tariffs on U.S. imports for 90 days, the bloc announced Thursday, a day after President Trump abruptly backed down on his punishing global levies. But the accelerating trade war between China and the United States showed no signs of abating, as Mr. Trump left in place his steep tariffs aimed at Beijing. Mr. Trump’s move after a week of market upheaval sent indexes in Europe and Asia higher on Thursday — after the S&P 500 rallied the day before to its biggest daily gain since 2008. His reversal prompted the European Union to put its new tariffs on hold in order “to give negotiations a chance,” said Ursula von der Leyen, president of the European Commission, though she warned that the tariffs would take effect if talks “are not satisfactory.” Mr. Trump left in place a base tariff of 10 percent on virtually all imports, as well as levies on autos, steel and aluminum. And his turnabout did not temper the greater concerns of economists who cautioned that the full repercussions from the trade tensions between Washington and Beijing would not be felt for weeks. Mr. Trump ratcheted up taxes on Chinese goods to 125 percent, his third such increase in a week, after Beijing raised tariffs on U.S. imports to 84 percent, escalating the conflict between the world’s two largest economies. Mr. Trump suggested on Wednesday that he was waiting to hear from China’s leader, Xi Jinping, so the two could broker a deal. China has said it is willing to hold talks, but not under duress. “China wants to make a deal,” Mr. Trump said. “They just don’t know quite how to go about it.”
Source: NYT

2. 1944-1991: Bretton Woods and How U.S. Trade Supremacy Shaped Cold War Victory Over The Soviets

The Bretton Woods system was an international monetary agreement created in 1944 that established rules for commercial and financial relations among major industrial nations, setting up a framework for international economic cooperation. Beyond this foundational purpose, it represented a strategic economic framework that extended beyond mere financial stabilization. While primarily designed to create a new international monetary order after World War II, the system effectively served as an economic cornerstone of America's Cold War strategy. By establishing dollar supremacy, fixed exchange rates, and institutions like the IMF and World Bank, the United States leveraged its economic might to forge and maintain alliances against the Soviets. American policymakers deliberately granted allied nations privileged access to the robust U.S. consumer market—the world's largest—creating economic interdependence that incentivized political alignment with Washington. This proved remarkably effective; the resulting prosperity among Western allies demonstrated capitalism's viability as an alternative to Soviet communism, contributing significantly to America's eventual bloodless victory when the Soviet Union collapsed in 1991.
Source: Citizen Journal

3. 1991-2016: Free Trade Boom Backfires and How the China Shock Devastates U.S. Manufacturing Heartland

Following the Soviet Union's collapse in 1991, the United States maintained and expanded its model of "free trade" despite the original geopolitical imperative having been fulfilled. Rather than recalibrating its economic approach after defeating its Cold War adversary, America doubled down on trade liberalization through agreements like NAFTA in 1994 and China's WTO accession in 2001. These decisions, particularly opening to China, triggered what economists call the "China Shock" — a rapid, devastating wave of manufacturing job losses and factory closures across America's industrial regions. Between 2000 and 2010, the United States lost approximately 5.5 million manufacturing jobs as production shifted overseas, with the industrial heartland experiencing the most severe impacts. Communities in the Midwest and Northeast saw their economic foundations crumble as facilities that had provided stable, well-paying jobs for generations shuttered permanently. This transformation effectively ripped the industrial heart out of America, leaving behind economic devastation, opioid epidemics, and declining life expectancy in once-prosperous regions, while corporations and coastal economies benefited from cheaper imports and expanded global markets.
Source: Citizen Journal

4. 2016-2024: Populist Revolt Against Globalization Reshapes Trade as Trump Pushes ‘America First’

The 2010s and early 2020s witnessed a profound political backlash against the post-Cold War global order, as communities devastated by deindustrialization found their voice in populist movements. The Brexit referendum of 2016 and Donald Trump's unexpected presidential victory that same year represented seismic rejections of what populists termed "the establishment" or "deep state" – the political and economic elites who, after successfully orchestrating the Cold War victory, maintained liberalized trade policies that hollowed out domestic manufacturing. These populist insurgencies directly challenged the Washington Consensus by appealing to workers whose livelihoods had been sacrificed on the altar of globalization. The COVID-19 pandemic in 2020, while unrelated to these trade policies, dramatically exposed the vulnerabilities of offshored supply chains as nations struggled to secure essential medical supplies and consumer goods amid global disruptions. This crisis reinforced populist critiques of excessive economic interdependence and became a powerful justification for economic nationalism. By 2024, Donald Trump secured a decisive victory in the U.S. presidential election, campaigning forcefully against the legacy of globalization and promising to restore American industrial might through protectionist policies and ‘America First’ reshoring initiatives that resonated with voters in former manufacturing regions.
Source: Citizen Journal

5. Trump’s Tariff Suspension Sparks Record Market Rally, Signals Cold War 2.0 Strategy Against China

Last week, President Trump implemented comprehensive tariffs that raised the average U.S. import duty to approximately 25%, a dramatic increase from the previous 1-3% rates that had defined America's post-Cold War trade policy. Global financial markets plummeted in response, with analysts warning of a potential worldwide recession as trade relationships recalibrated to this new protectionist reality. However, yesterday's surprise announcement of a 90-day suspension on these tariffs triggered the most substantial single-day market rally in over 15 years, inspiring conflicting interpretations of Trump's strategy. Critics suggest the administration "blinked" in the face of market pressure and international backlash, while supporters frame the maneuver as classic Trump negotiation tactics straight from "The Art of the Deal." Regardless of interpretation, the broader geopolitical shift remains clear: America is strategically isolating China (where tariffs exceeding 100% remain firmly in place) while potentially offering preferential arrangements to allies willing to join an anti-China coalition – effectively reviving the Cold War playbook of economic incentives for political alignment. This approach raises the most consequential question of our era: whether this emerging Cold War 2.0 will remain confined to economic and technological competition, or whether mounting tensions will eventually escalate into direct military confrontation between the world's preeminent powers.
Source: Citizen Journal

This series of old articles remains relevant and offer my vision for what a new global trade order could look like.

April 10, 1925: F. Scott Fitzgerald’s third novel, "The Great Gatsby," is published to mixed reviews and disappointing sales—fewer than 25,000 copies by the author’s death in 1940. By the 2010s, it is routinely selling 500,000 copies a year.

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Sources

1. NYT: https://www.nytimes.com/live/2025/04/10/business/trump-tariffs-stocks/heres-the-latest?smid=url-share
2. Citizen Journal
3. Citizen Journal
4. Citizen Journal
5. Citizen Journal