The unpredictability of the Trump administration makes it impossible to predict what will happen when the 90-day tariff suspension expires.
For weeks, US President Donald Trump had been pushing ahead with plans to impose steep new tariffs on imports, despite warnings that the policy would cause economic chaos. On April 9, after days of sending global stock markets plunging, he abruptly reversed course.
In a social media post, Mr. Trump said he was suspending a series of steep tariffs on imports from many of America’s largest trading partners. The announcement came just 13 hours after the new tariffs were set to take effect. Mr. Trump cited the turmoil in financial markets following the tariffs as influencing his decision.
Here’s what we need to know about what happened and what the future holds.
What taxes is Trump suspending?
President Trump announced a 90-day suspension of so-called “reciprocal” tariffs on imports from nearly 60 countries and the European Union (EU).
Tariffs are tailored to each trading partner and are proportional to the size of the country’s trade surplus with the United States.
Imports from those trading partners are still subject to a flat 10% tariff, which Mr. Trump has imposed on goods from all foreign countries, starting April 5, 2025.
China, one of the countries subject to the reciprocal tariffs, was not included in the suspension. Instead, Mr. Trump announced that he would increase tariffs on Chinese goods from 104% to 125%.
His decision came after Beijing announced plans to retaliate, imposing 84% tariffs on US goods.
Why did Trump pause some tariffs?
The rollout of the tit-for-tat tariffs has caused market turmoil and raised fears of a recession. Mr Trump has come under intense pressure from business leaders and investors to reverse the decision.
“I think people are getting a little out of control,” Mr Trump told reporters at the White House when asked why he had changed his mind. “They’re getting a little nervous, a little scared.”
What happens when the tariff moratorium ends?
The unpredictability of the Trump administration makes it impossible to predict. Trump’s tweet announcing the tariff pause suggests that the purpose of the pause is to give US trading partners a chance to reach an agreement to avoid higher tariffs.
Mr. Trump and other U.S. officials have said they want countries to take a range of steps, including reducing tariffs as well as trade barriers, which can include regulations, quotas, subsidies for domestic producers, and protections for intellectual property rights. Mr. Trump argues that the U.S. trade deficit is a result of trade barriers, and wants to eliminate them.
It is likely that when the 90-day pause ends in early July, countries that have not yet negotiated a deal with the US will again face the tariffs that were temporarily imposed on April 9.
But it is also possible that Mr Trump will announce another tariff delay. Remember, he has twice delayed imposing tariffs on some imports from Mexico and Canada.
What is the situation in Canada and Mexico?
America’s two largest trading partners are not subject to reciprocal tariffs. Instead, goods from Canada and Mexico face a 25% tariff, which Mr. Trump has blamed on illegal drugs and illegal immigrants flooding across the US border.
However, imports protected under the North American Free Trade Agreement are duty-free.
What is the stock market reaction to the tariff moratorium?
Global stocks surged after Mr Trump’s announcement to suspend tariffs. The S&P 500 rose 9.5%, its biggest one-day gain since 2008.
The latest moves cap a tumultuous week that began when Mr Trump shocked the world with his announcement that he would impose the highest tariffs the US has imposed in more than a century.
Oil prices, which have fallen in recent days due to concerns about a global economic slowdown, also rebounded following the latest news.
Is America headed for recession?
In fact, the US economy was already heading towards recession before Mr. Trump announced the suspension of tariffs.
The tariffs, announced by Mr Trump on April 2, add to the already bad mood among consumers and Wall Street banks, raising the possibility of a global recession in 2025.
Analysts say the prospect of higher prices and increasingly cautious business activity will dampen economic growth and tip the economy into recession.
The stock market surge following Mr Trump’s announcement of a tariff pause has brought relief to many on Wall Street, and prompted economists at Goldman Sachs Group to scrap their earlier recession forecast.
But the deep sense of uncertainty surrounding Trump’s next move, combined with the impact of tariffs still in effect, including very high tariffs on imports from China, has left many business leaders and investors nervous.
The economy will remain under pressure if concerns lead to significant cuts in spending.
Why is China the main target of Trump’s tariff policy?
Mr Trump has argued that China’s trade practices are unfair, and he made that argument long before he implemented reciprocal tariffs. During his first term, he raised tariffs on imports from the world’s second-largest economy.
During his second term, he signed executive orders arguing that tariffs were a way to hold China accountable for failing to control the export of fentanyl and its precursors, which have contributed to the US opioid crisis./.
