All the major central banks are now engaged in Quantitative Tightening, including at last the Japanese Central Bank.Japan has been the source of excess liquidity in the world for over thirty years through their Quantitative Easing aka money printing, and they've completely distorted world markets in the process. So it's good that they've finally stopped.

There has been some debate as to whether President Trump's tariffs are a negotiating tactic to get better terms of trade, or whether they are a revenue-raising policy.It now looks like it's about revenue raising. The "drama" is simply about normalising the higher tariff rate. Example: tariffs on China were set at 34% on Liberation Day (April 2nd), the markets swooned, Trump jacked them up to 145% for four weeks, so the markets were mightily relieved when they came down to 30%. 30% has been normalised for China.

President Trump has just announced 50% tariffs on the EU, effective on June 1st 2025. Here is his Truth Social post:sourceHe says it's because negotiations with the EU are going nowhere. Recall that on "Liberation Day" (April 2nd), Trump put 20% tariffs on the EU. But when the markets swooned, he reduced the tariffs to 10% for 90 days, so negotiations could take place.

In the last week, the Trump administration has managed to calm the trade war by agreeing provisional deals with the UK and China.Starting with China first because it's economically more important, here is a graph of how US tariffs applied to China have changed since Trump came to power:

First, a timeline of when the tariffs came into force:On April 2nd, "Liberation Day", a range of tariffs were announced, from 10% on the UK and Australia, 20% on the EU to 50% on tiny Lesotho. But additional tariffs announced on China took their total to 84%.

In an interview with Yahoo media on April 15th, Treasury Secretary Scott Bessent said, "No one thinks steep China tariffs are sustainable over the long run".He was referring to the 145% tariffs President Trump had put on China in retaliation for China's retaliation for American retaliation to China's response to Trump's "Liberation Day" tariffs on April 2nd.