Just after 10 am this morning*, President Trump announced that he is pausing some of the implementation of all tariffs, except those on China, for 90 days.
Here is the full text of the announcement:
Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately. At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable. Conversely, and based on the fact that more than 75 Countries have called Representatives of the United States, including the Departments of Commerce, Treasury, and the USTR, to negotiate a solution to the subjects being discussed relative to Trade, Trade Barriers, Tariffs, Currency Manipulation, and Non Monetary Tariffs, and that these Countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately. Thank you for your attention to this matter!
Donald Trump Truth Social 04/09/25 01:19 PM
Let’s get the most obvious thing out of the way: this is an unreservedly good thing for the economy in the short and long term. Whether it was Fox and Friends or others, someone finally got it through his skull that his policies were harming the US economy. And the markets have immediately reacted positively to the news.
This also doesn’t negate how reckless the tariffs were and the damage they have already done.
While Trump apologists claim that what we see is “the art of the deal” in action, I can only ask, “What is the deal that the White House is looking for?” Again, were they intended to help with negotiations? Or is it to return manufacturing to the US? Or is it to help close the deficit and make up for lost income tax revenue?
Also, no one should believe that this was always the plan. Remember the party line from the White House yesterday was “full steam ahead.”
Nor did it appear that US Trade Rep Jamieson Greer was in on the grand plan either–he was defending the tariffs in front of Congress when the news came through:
I am curious how this clear decision to back away from the edge strengthens the mercurial Trump Administration’s position. They just used a lot of soft power to extract talks and promises from nations we’ve previously had positive relationships with.
What happens 90 days from now if those nations are not willing to participate in negotiations with Trump and his zero-sum game approach to tariffs? Once you’ve established that you are willing to blink first when the political cost appears too high, it’s hard to regain the “he’s so crazy he might go through with it bargaining chip.”
Also, I have a lot questions about the meaning of this sentence towards the end:
I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately.
Does he mean reciprocal tariffs being collected today are reduced to 10% or that all of the reciprocal tariffs he planned to apply have already been reduced to 10% after the pause? If it’s the latter, then that completely changes the income projections the White House used to make up the budget gaps. And it also means that he’s already given up a significant amount of negotiating ground.
FWIW, reporting on this seems to be mixed. Here’s the Washington Post’s read:
[Trump] also said more than 75 other countries that were set to face what the White House has called “reciprocal tariffs” have been involved in negotiations and would see their levies paused or lowered to 10 percent for 90 days, also effective immediately.
So I guess the answer to what is going to happen is “yes*.”
Update 1: it also appears, according to the New York Times, that the Administration has also levied some unexpected tariffs on Canada and Mexico as part of this announcement:
Update 4: The White House has now offered new guidance about Canada and Mexico–it doesn’t appear they are included in the 10% roll out despite what Scott Bessent said to reporters. This is a well oiled machine, folks:
Clearly, I don’t understand the art of the deal. Or, as with all things for the last few weeks, only time will tell because it’s pretty clear they are building this plane as they fly it.
Update 2: It looks like what really moved the needle was actually the Bond market–which would have greatly impacted the United State’s long term debt.
Update 3: Here are the two best takes I’ve seen on this:
First, the pause isn’t really a pause.
And, as always, there is no plan (beyond undercutting all of your advisors and spokespeople).
* – Earlier this morning, before the President made his announcement, he sent the following message encouraging people on Truth Social to buy stocks. I’m not sure it constitutes insider trading, but it sure doesn’t feel ethical considering that (at the time this was sent) he was working with Bessett and Lutnik on the announcement about the tariffs.
** – If it turns out that the majority of the tariffs are still going forward, just at 10%, then I expect this market rally will be short-lived. On the other hand, if the majority of tariffs end up being paused, I don’t see how Trump maintains his “tough guy” image because that only supports how much he’s blinked in this case and trying to save face through empty threats. Either way, I don’t see things stabilizing for businesses doing long term planning for quite a while.
