by Robert Peston
Trump seems overnight to have capitulated both in his trade wars – with China, the conflict that matters – and in his attempt to force the Federal Reserve to cut interest rates.
Tariffs on China will be negotiated much lower, he says. And he won’t try to fire Fed chair Jerome Powell, who thinks it too early to cut the cost of money.
Trump’s surrender on both fronts are linked. He could not afford the shock to America’s economy from the trade war if the Fed was not prepared to ignore the inflationary impact of tariffs and reduce interest rates.
In the game of chicken, China and Powell won – as have global investors, who sold the dollar and US government debt, to punish Trump for what they saw as his fecklessness.
It looks as though Putin may win too. It is no coincidence that – after biding his time – he is hinting at willingness to engage in peace talks at the moment Trump needs a diplomatic “success” to compensate for economic failure.
So poor Kyiv will face enormous pressure from Moscow and Washington to surrender up to a fifth of Ukraine to Russia, including a formal ceding of sovereignty over Crimea.
This is a moment that will test Europe’s resolve to stand by Zelenskyy.
Follow STV News on WhatsApp
Scan the QR code on your mobile device for all the latest news from around the country
