Does Trump’s 90-day tariff pause really hint at a change of heart?

Two days ago, talk of a 90-day pause on Donald Trump’s “reciprocal tariffs” was branded “fake news” by the White House. This afternoon, the President has confirmed a 90-day pause on the higher tariff rates on all countries apart from China.

“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,” the President shared. This is an increase on Trump’s part, from the 104 percent levy announced overnight, which China countered with an 84 percent tariff on American imports, which is set to go into effect tomorrow.

“Conversely, and based on the fact that more than 75 Countries have called Representatives of the United States…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!”

You can bet world leaders are giving thanks indeed – not just for the pause, but for the dramatic about-face in the President’s position that negotiations would not be possible. Markets are betting on it anyway: US stocks are soaring in response to the news. It is yet another fluctuation in the market, which has been up and down all day, responding to the “fire sale of Treasuries,” a further weakening dollar and investor demands for higher returns on Treasury bonds. For the first time in a week, there appears to be clarity, for a little while anyway. In the short term, these levies are no longer about trade across the world. They’re about China.

Was this how the tariffs were always going to pan out? Those who like to suggest the President plays 4D chess will be quick to insist targeting China was always the his intent. But the utter messiness of the past week, and even his comments this morning, indicate that this was another quick decision from the President.

After all, it was only hours ago that Trump exclaimed “BE COOL!” on Truth Social “Everything is going to work out well,” he said. “The USA will be bigger and better than ever before!” 

The response was not cool. The stock market continued to rise and fall, over and over, and the dollar continued to sink. Deutsche Bank told the Wall Street Journal that the past week has seen a “collapse in the price of all US assets.” 

“THIS IS A GREAT TIME TO BUY!!!” the President also shared this morning. Buy what? Goods from abroad? Certainly not. Goods made in America? He seemed to mean the stock market – trying to put a positive spin on the collapse in confidence experienced over the past week. Now, just hours later, stocks are soaring. At time of writing, the NASDAQ is up 9 percent and the Dow up 6 percent, according to the Journal.

Is it possible that the economic turmoil took its toll on the President after all? Trump didn’t just run on the promise of tariffs, but to make American life more affordable and to recreate the booming economy from his first term. This past week will not have been comfortable for the President, as the latter two promises came heavily under threat. 

For all the claims that Team Trump was unfazed by market reaction to the tariffs, it was increasingly clear over the weekend that the chaos Trump often enjoys could no longer be contained or controlled by him or his Cabinet. It was also becoming clear that a lot of global players were getting ready to challenge the President. While he insists that only China has retaliated, the European Union has been gearing up to make their own set of levy announcements – a decision they may well reconsider given the latest news. 

Make no mistake: this new iteration of the tariff regime still risks bringing about many of the consequences created by trade barriers (shortages, inflation and recession, to name a few). But today’s announcement, while still muddled (the baseline 10 percent tariff remains on all countries) does return some of that control to the White House. Trump has established that he is indeed open to negotiations and to changing his mind. This will mean countries are more likely to approach him friendly and open to compromise – deferential enough that Trump can insist he’s scored some wins.

Then again, the President has already shown this term that extensions do not mean tariffs disappear. The brief pause for levies on Canada and Mexico were still implemented. This really may be the eye of the storm, but after all the chaos and destruction of the past week ($10 trillion wiped out in the stock market in just days), any relief will be welcomed.