Why Trump Halted Tariffs and What Will Unfold in 90 Days?
Why Trump halted tariffs: For weeks, President Donald Trump had pursued plans to impose substantial new tariffs on imports, sparking warnings about economic disruption. However, following a sharp decline in global stock markets, Trump shifted course. On April 9, he announced a suspension of tariffs on imports from many of America’s major trading partners, just 13 hours after they were initially enforced.
90-Day Suspension for Many Countries
Trump revealed a 90-day suspension of the so-called “reciprocal” tariffs on goods from nearly 60 countries and the European Union. These tariffs were initially designed to match the trade surplus each country had with the US. Now, imports from these nations will face a uniform 10% duty.
China Excluded from Suspension
China, the largest source of US imports, is excluded from this tariff suspension. Instead, Trump increased tariffs on Chinese goods from 104% to 125%. This decision followed China’s retaliation, imposing an 84% tariff on American products.
Sector-Specific Tariffs Remain in Effect
Certain tariffs remain in place, including a 25% tariff on foreign-made vehicles entering the US. This tariff, which took effect on April 3, also applies to auto parts, effective by May 3. Additionally, tariffs of 10% or 25% will continue on imports from Mexico and Canada, although many businesses can avoid these through exemptions under the US-Mexico-Canada Agreement.
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Market Instability Fuels Policy Reversal
The implementation of reciprocal tariffs caused market instability, sparking fears of a recession. Business leaders and investors pressured Trump to reverse course. Trump dismissed the concerns, stating that the market had “overreacted” to the tariffs.
Negotiations for Future Trade Deals
Trump’s announcement of the tariff pause allows US trading partners a 90-day window to negotiate deals that could avoid the tariffs. His administration has emphasized the need for countries to reduce trade barriers, including tariffs, quotas, subsidies, and weak intellectual property protections. If no agreement is reached by early July, the tariffs may return or be extended.
Stock Market Reacts Positively to Announcement
Stocks surged following Trump’s tariff pause, with the S&P 500 climbing 9.5%, its biggest one-day gain since 2008. Oil prices rebounded as global economic slowdown concerns eased. Investors reacted positively to the tariff suspension announcement. The market experienced notable gains after the news.
Concerns About Economic Slowdown Persist
Before the pause, Trump’s tariff plans had dampened consumer sentiment and raised fears of a global recession. Analysts warned that higher prices and cautious business behavior would hinder economic growth. While the market rally provided some relief, the ongoing uncertainty surrounding Trump’s tariff strategy left many investors uneasy.
Trump’s Ongoing Conflict with China
Both Trump and former President Joe Biden have criticized China’s trade practices, including heavy subsidies and forced intellectual property sharing. Trump’s tariffs on Chinese goods first emerged during his first presidential term. In his second term, executive orders indicated that tariffs were also a tool to pressure China on its role in the US opioid crisis.
