Were the last six weeks all a bad dream?

For the last six weeks, everyone in markets has been contemplating a reordering of world markets.

Now, we’re back to where we started in tariff rates and in markets. That has Deutsche Bank wonder: What was the point of all of this?

They note that the latest data shows China exports to the US on a steady decline with April 2025 imports at the lowest in real terms since 2009.

“Previously, we were convinced they were likely
to be very hawkish towards China and the two nations would continue to decouple
and that the massive imbalance between the two nations’ manufacturing output
and the national security concerns would ensure the ideology remained
throughout the term,” writes DB multi-asset strategist Jim Reid.

“I’ll be honest – I have more questions than answers at
the moment but it seems that: (1) more pragmatic voices in the US
administration have taken control again; (2) the near-term economy is being
prioritised over the long-term security agenda; (3) the US needs trade to
continue for now, and perhaps overestimated the leverage high tariffs would
give them in extracting concessions.

So were the last six weeks all a bad dream? Will the
unpredictable nature of US policy continue or are we now on a more conventional
path? Not sure I have the answers this morning but, if you’re looking for
positives, US policy does seem to have galvanised Europe, is encouraging China
to rebalance towards consumption and Bessent has even discussed how the trade
deficit may be partly being caused by the fiscal deficit. So maybe US policy
has been a force for good?”

That’s a common sentiment.

This article was written by Adam Button at www.forexlive.com.