"China lacks respect...but let's negotiate," Trump's true intentions [Lee Sang-eun's Washington Now]

The U.S. stock market, which had been flooded with listings due to tariff uncertainty, surged sharply. This is because President Trump backed off from the reciprocal tariff measures announced on the 2nd. Around lunchtime today, President Trump announced on Truth Social that he would set reciprocal tariffs at 10% for 90 days. Accordingly, Korea will also be able to negotiate while maintaining a 10% tariff instead of 25% for the next 90 days. However, China was excluded from this.

"People were scared, so I deferred the measure"

When asked why he deferred the reciprocal tariffs at an event today, President Trump replied, "Because people were scared." He also mentioned that he watched the bond market last night and said, "People were anxious." He was referring to the selling pressure on U.S. Treasury bonds that occurred yesterday.

Treasury Secretary Besant claimed that all of this was part of President Trump's negotiation strategy. It was a planned action to create a platform to negotiate with other countries. Secretary Besant told reporters, "Waiting until today was the president's decision," and said, "No one can secure their leverage like Trump." Seventy-five countries have contacted us, and because President Trump wants to participate directly in negotiations with them, we decided to have a 90-day grace period.

The Nasdaq, S&P index, and Dow Jones index all surged. It was said to be the biggest rally in 24 years, so it must have been a moment of relief for those who invested in U.S. stocks. The Nasdaq jumped 12%, the S&P 50 rose 9.5%, and the Dow Jones increased by 7.9%. The U.S. dollar index fell to the 101 level but rose to the 103 level with the news of the 90-day grace period.

The yield on the U.S. 10-year Treasury bond soared above 4.5% per annum in the early session today but fell to the 4.3% range thanks to the tariff deferral and solid demand confirmation. Gold and oil prices also rose significantly. WTI crude oil rose about 4.9%, and Brent crude oil increased by about 4.4%, trading at $62 and $65 per barrel, respectively. Natural gas prices jumped significantly, rising by 8.2%. Gold prices rose 3.6%, trading at around $3,087 per troy ounce.

Trump continues to send negotiation messages to Xi Jinping

While President Trump deferred the overall imposition of reciprocal tariffs today, he further increased the additional tariff rate on China, which is currently 104%, to 125%. This is because China "lacks respect for the global market," according to President Trump. He strongly criticized that while other countries do not retaliate, only China is retaliating.

China is unlikely to easily back down to the U.S. Yesterday, in response to the U.S. adding a 50% tariff, China decided to impose an 84% retaliatory tariff on U.S. goods, which is interpreted as a willingness to "go all the way."

The reaction has not yet come out as it is still early in China, but there seems to be a possibility of taking additional tariff increase measures. Experts who have long observed China say that President Xi Jinping does not intend to easily show a concession.

Nevertheless, President Trump expressed his intention to keep the door open. He said, "China wants to make a deal but just doesn't know how," and "President Xi is a proud man." He also said, "We will make a deal with China and with all countries," adding that such agreements would be fair. He spoke in a tone that he is the one who decides the situation and is generous.

White House spokeswoman Caroline Levitt also told reporters, "You might have tried to argue that the world would get closer to China because of the tariffs, but we saw the opposite effect." "The whole world is contacting the U.S., not China," she said. The implication is that they cannot give up on the U.S., which has the market and consumers. The message is that if they hold out like this, only China will be isolated.

It is uncertain whether things will flow as the Trump administration wants. In the end, the Trump administration is criticizing China's retaliation while hoping and waiting for China to come to the negotiating table. This is because China is the biggest puzzle to solve the trade deficit issue. However, as President Trump said, it seems unlikely that proud China will easily back down. Ultimately, the key seems to be whether President Trump can create a moment where the chicken game between the two sides can be stopped.