Why Trump Paused Tariffs, and What Happens in 90 Days: QuickTake

For weeks, President Donald Trump has plowed ahead with plans to impose steep new tariffs on imports despite warnings that the policy could trigger economic chaos. On April 9, after a multiday plunge in global stock markets, he changed course.

In a social media post, Trump said that a set of tariffs on imports from many of America’s largest trading partners had been paused. The announcement came only 13 hours after the duties had gone into effect. Trump indicated that turmoil in the financial markets following the implementation of the tariffs played a role in his decision. Here’s what to know.

What tariffs did Trump pause?

Trump announced a 90-day pause on what the administration has termed “reciprocal”tariffs on imports from almost 60 countries and the European Union. The tariff levels were customized to each trading partner and corresponded to the size of their trade surplus with the US.

What tariffs are still in place?

Imports from those trading partners will now be subject instead to the flat duty of 10% that Trump placed on goods arriving from all foreign countries as of April 5.

China, the country that accounts for the largest share of US imports, was not included in the pause. Instead, Trump said he would increase levies on Chinese goods to 125% from 104%. Trump’s decision came after Beijing announced plans to retaliate with an 84% duty on American goods.

Other sectoral and country-specific tariffs also remain in place. Those are:

• A 25% levy on all foreign-made vehicles brought into the US, which kicked in on April 3. Auto parts are due to face the same tariffs by May 3. This tariff will only be charged on the share of non-US content in those vehicles and components.
• A 25% tariff on imports of steel and aluminum.
• Tariffs of 10% or 25% on imports from Mexico and Canada. Companies are mostly able to avoid these through an exemption for products shipped under the rules of the 2020 US-Mexico-Canada Agreement on free trade. Bloomberg Economics has said it expects significant Canadian exports such as crude oil and potash to escape those tariffs.

For further details, including other tariffs threatened but not yet imposed by the Trump administration, see this updated Tariff Tracker.

Trump indicated that turmoil in the financial markets following the implementation of reciprocal tariffs played a role in his decision to pause most of them.

Photographer: Michael Nagle/Bloomberg

Why did Trump pause some tariffs?

The implementation of the reciprocal tariffs caused market turmoil and stoked recession fears. Trump came under massive pressure from business leaders and investors to reverse course. “I thought that people were jumping a little bit out of line,” Trump told reporters at the White House when asked why he backed off. “They were getting a little bit yippy, a little bit afraid.”

Bond Chaos, Deal Mania and Dimon: Inside Trump’s Tariff Reversal

What happens when Trump’s pause ends?

The unpredictability of the Trump administration makes it impossible to say.

The president’s post announcing the pause suggested that its purpose is to give US trading partners an opportunity to strike deals to avoid the tariffs. Trump and other US officials have said they want countries to take measures that include reducing their own tariffs as well as other barriers to trade, which could include regulations, quotas, subsidies to domestic producers, and insufficient protection of intellectual property. Trump argues that the US trade deficit is a result of barriers to trade and wants to eliminate it.

It’s possible that when the 90-day pause ends in early July, countries that have not negotiated a deal with the US will again face the tariffs that were briefly imposed on April 9. Trump could also announce another deferment. He twice delayed the imposition of tariffs on some imports from Mexico and Canada.

Tractor trailers at the Ysleta-Zaragoza International Bridge port of entry on the US-Mexico border on April 3.

Photographer: Justin Hamel/Bloomberg

What was the stock market reaction to the tariff pause?

Stocks soared following Trump’s announcement of a pause on some tariffs. The S&P 500 jumped 9.5%, the index’s biggest single-day leap since 2008. The latest moves cap a week of turmoil that began when Trump shocked the world by announcing that he was imposing the highest US tariffs in more than a century. Oil prices, which had slid in recent days on fears of a global economic slowdown, also rallied on the tariff reprieve.

Is the US heading into a recession?

It had started to look that way before Trump’s announcement of the pause. The decision to impose tariffs, unveiled by Trump on April 2, weighed on the already deteriorating mood of consumers, and Wall Street banks had raised the odds of a global recession this year. Analysts said the prospect of higher prices and increasingly cautious business activity would dent economic growth and possibly cause the economy to contract. (Definitions of “recession” differ, but many economists define it as a period when economic output contracts for two straight quarters. The leading US forecaster uses a slightly different definition.)

Confetti flies during the closing bell at the Nasdaq MarketSite in New York on April 9.

Photographer: Michael Nagle/Bloomberg

The stock market’s surge in the aftermath of Trump’s pledge to pause some tariffs came as a relief to many on Wall Street, and the news prompted economists at Goldman Sachs Group Inc. to rescind their recession forecast. But deep uncertainty surrounding Trump’s next move, combined with the impact of tariffs that for now remain in effect, including the steep levies on imports from China, have left many corporate leaders and investors nervous. The economy will remain under pressure if those jitters lead to a substantial pullback in spending.

Why is China the primary target of Trump’s tariffs?

Both Trump and his predecessor Joe Biden have argued that China engages in unfair trade practices, such as targeting favored industries with huge state subsidies or forcing foreign companies to share their intellectual property in exchange for access to China’s vast market.

Trump first increased tariffs on imports from the world’s second-biggest economy in his first term as president. In his second term, he’s signed executive orders that suggest tariffs are a way to hold China accountable for its alleged failure to curb the export of fentanyl and the chemicals required to make the drug, which have contributed to the US opioid crisis.

--With assistance from Matthew Boesler, Reade Pickert, Josh Wingrove, Skylar Woodhouse and Daniel Flatley.

To contact the reporters on this story:
William Norris in New York at wnorris8@bloomberg.net;
Wendy Pollack in New York at wpollack@bloomberg.net

To contact the editors responsible for this story:
Thomas Pfeiffer at tpfeiffer3@bloomberg.net;
Lisa Beyer at lbeyer3@bloomberg.net

Joel Weber, Romy Varghese

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