White House will have to bow to reality, sooner or later

The differences between Federal Reserve Chair Jerome Powell and US President Donald Trump on interest rates are no secret, nor is the pressure Trump is applying to try and get the head of the Fed to do what he wants.

"The Fed really owes it to the American people to get interest rates down. That's the only thing he's good for. I am not happy with him. If I want him out of there he'll be out real fast believe me," Trump told the media on Thursday, accusing the central bank chief of "playing politics" by not cutting interest rates to help cushion the inflation and unemployment shock waves of his tariff policies.

His remarks came after Powell on Wednesday warned Trump's tariff policies risk pushing inflation and unemployment further from the central bank's goals, which it is mandated by Congress to manage. The Fed was "well positioned to wait for greater clarity" about Trump's policies and their impact, Powell said, making no secret that the Fed disagreed with the Trump administration's abuse of tariffs.

US stock markets plunged after Powell's remarks, prompting Trump's intimidation of him the next day. That also seems to have prompted his unexpected signal of a potential end to his general tariff hikes on Chinese goods — China having already said it would not respond with retaliatory tariffs as the tit-for-tat tariffs were already so high that further hikes would just be higher numbers, something Trump indirectly acknowledged.

"I don't want them to go higher because at a certain point you make it where people don't buy," Trump told reporters. "So, I may not want to go higher or I may not want to even go up to that level. I may want to go to less because you know you want people to buy and, at a certain point, people aren't gonna buy."

However, the US administration is planning more punitive tariffs on specific goods which will likely be countered by China. In the meantime, Trump saying a deal over the fate of social media platform TikTok may have to wait suggests any negotiation that is going on is not a piece of cake, which is to be expected.

The administration has also exempted domestic exporters and vessel owners servicing the Great Lakes, the Caribbean and US territories from port fees to be levied on China-built vessels.

The easing of the port fee policy, Trump's tariff remarks and the "delay" to a TikTok deal, along with his criticism of Powell, who has actually done nothing wrong in trying to prevent the US economy slipping into a looming recession by protecting the Fed's independence, all point to a diminished appetite for the aftereffects of the tariff war the White House has launched, which has created another fine mess.

Although the US president defines it as "flexibility", his administration is continually trying to apply field dressings to the US economy to stem the bleeding from the wounds it has inflicted on it and ease the suffering enough so it can win time and space for it to practice its supposed "art of the deal".

With a united front emerging against its extortion at home and abroad, it is to be hoped that its de facto compromise indicates that the US administration is beginning to bow to reality.