Nobody knows what made Trump pause his tariffs. Was it the ongoing meltdown in equity and bond markets and backlash from friends on Wall Street? Was it the prospect of what Trump described as a general sense of anxiety among the people at large? Or was it, as Trump’s supporters like to describe his every action, a masterstroke to isolate China. None of these questions actually matter.

What matters is that Trump 2.0 has managed to unleash a kind of economic uncertainty on the global economic order which will have a crippling effect on long-term economic decisions not just in financial markets but also the real economy. Tariffs can be imposed and revoked within a week, but supply chains take years to build and decades to develop. Also, given the importance of Chinese economy in global value chains, even a US-China trade war with each side reciprocating the other’s aggression is bound to inflict significant pain on the world.

Indian equity markets will hopefully recover large part of their losses given Trump’s roll back. The Indian government has been expressing confidence that it can reach an amicable trade deal with the US. These upsides notwithstanding, the uncertainty which Trump has triggered cannot be beneficial from any large economy’s (India included) perspective. There is very little any country can do to change this as long Trump has the democratic mandate.

The economic climate going forward is going to be extremely turbulent. It will require extreme caution in policymaking and business decisions. This is bound to extract a cost from the entire world.