PRESIDENT Donald Trump`s announcement of sweeping tariffs on imports from nearly every country upended the global trading order and plunged markets into turmoil. It left countries scrambling to respond by either imposing counter levies or seeking negotiations to secure lower rates. The US stock market lost $5.4 trillion within two days of the announcement while global stock markets lost $5tr as fears intensified about a global recession. The prospect of a fullblown trade war shook investor confidence. The IMF warned this would significantly affect already sluggish global economic growth. The head of America`s central bank warned increased tariffs would lead to `higher inflation and slower growth`.

Using emergency powers, Trump slapped socalled `reciprocal tariffs` on America`s trading partners that ranged from baseline 10 per cent to 50pc, an action that did not discriminate between friend and foe. The steepest tariffs were imposed on Asian countries with China initially facing 34pc (added to previous levies and an additional 50pc it took the net rate later to 104pc). EU was subjected to a blanket 20pc levy. Trump`s justification rested on flimsy grounds that this will boost the US economy by reducing its trade deficit, bring manufacturing and jobs home, promote investment in the country, raise revenue to finance deep domestic tax cuts, and protect American businesses and workers. Most of these assumptions are deeply flawed but the Trump administration rejected the view that the measures would hurt US industries and lead to recession and higher prices for American consumers.

The Financial Times described Trump`s decision as `one of the greatest acts of self-harm in American economic history`. In similar vein, The Economist wrote in its leader that Trump`s announcement, which marked the biggest break in America`s trade policy in over a century, `committed the most profound, harmful and unnecessary economic error in the modern era`. It dubbed Trump`s economic ideas as delusionary `nonsense`. Former US treasury secretary Janet Yellen described the tariffs as `the worst selfinflicted wound` she had ever seen imposed on a well-functioning e conomy.

The world`s response was swift and strong.America`s biggest trading partner and the world`s largest exporter, China retaliated by announcing a matching 34pc tax on US imports. When Trump imposed additional duties, Beijing also raised tariffs and said it would `fight till the end`. This marked a dangerous escalation in the trade war and drove the two global powers towards a historic split. European leaders roundly denounced Trump`s tariffs as `illogical` and `paranoid`.

With markets tanking, American bankers and businessmen panicking and heavy sell-off in US bonds, Trump suddenly switched course. He backed down against a range of countries he claimed wanted negotiations and did not take retaliatory actions.

He announced a 90-day pause on tariffs but added more levies on China taking them eventually to 145pc. The policy U turn so characteristic of Trump was apparently the result of combined pressure from the US business community, foreign governments and Congressional leaders including Republicans. But while it temporarily halts higher duties on many countries, it doesn`t end uncertainty about Trump`s next protectionist moves. A 10pc levy on most countries is still in force while some assessments show that despite Trump`s retreat `tariffs average over 25pc across all trading partners, when weighted by America`s imports last year`.

How far Trump`s tariffs are a negotiating tactic to force trading partners to align with Washington`s interests will soon be tested. His 90-day pause suggests negotiations may enable some countries to bargain for lower rates in return for concessions. What those concessions are will be determined by Trump. But while Trump`s climbdown has come as a relief to many countries, no one can be sure he won`t flip again.

In any case, the damage to US credibility has been incalculable. Markets remain jittery while Trump`s erratic policies have injected volatility into the global economy. The US-China trade clash with China hiking retaliatory tariffs to 124pc will dampen global growth and raise inflation in America.

The geopolitical consequences could be even greater as nations across the world begin to recalculate their relationship with an unpredictable, whimsical, bullying power whose reliability is ingrowing doubt. Trump`s economic warfare made no distinction between friend and adversary; almost everyone being deemed `cheaters`. It angered nations across the world, placing traditional relations with allies under strain and ratcheting up tensions with them. This may affect cooperation by them on other fronts too. It could set in train a realignment of relations and even reshape geopolitics over time.

Trump`s unilateralist action is likely to erode the trust and confidence of allies urging them to adopt hedging strategies and consider reducing their exposure and dependence on the US in the long run. Such recalibration of foreign policies may leave Washington without the firm friendships and alliances it has counted on in the past.

This has strategic implications for America`s contain-China strategy especially in Asia, where allies like Japan, South Korea and others were hit hard by tariffs (even if they are now up for negotiation), some of whom were persuaded in the past to move their businesses out of China.

Faced with an untrustworthy trade partner in the US, the economic imperative for countries would be to pursue trade diversion. As some commentators have pointed out, the EU, far from decoupling, may well consider re-coupling with China. Countries will look for trade opportunities with each other and may gravitate more towards China. That top officials from China, Japan and South Korea met twice in the past fortnight to enhance `trilateral trade cooperation` says much about emerging trade alliances.

If Trump has chosen an isolationist policy, isolation is what the US economy will end up in. The biggest beneficiary will be China even as it struggles now to limit the damage wrought by Trump`s tariff war. As Howard French wrote in Foreign Policy, `If a country has to choose a superpower to hitch its wagon to, China may loom as the preferable option` because it appears as a more moderate and stable force.

The consequences of the turmoil caused by Trump at home and abroad will come back to haunt his country whose international reputation has already been severely tarnished. • The writer is a former ambassador to the US, UK and UN.