Tariffs Pause - April 9, 2025
President Trump announced a 90-day pause on most of the recently imposed "reciprocal" tariffs (starting April 2). The measure aims to contain the negative effects on global markets and businesses.
Key points:
A universal tariff of 10% remains on imports from most countries (including the EU and the UK).
Tariffs above 10% suspended for 59 countries (e.g., Vietnam, Australia) until July, conditioned on negotiations.
China excluded: Tariffs on Chinese products rose to 145%, intensifying the trade war.
Economic impact and on markets:
Markets rose after the announcement (S&P 500 +9%, Nasdaq +12%), but remain volatile.
Companies face confusion, layoffs (e.g., Stellantis cut 900 jobs), and disruptions in supply chains.
Fears of a global recession: The WTO warned of a possible 80% decline in US-China trade and a 7% loss in global GDP.
Exceptions:
25% tariffs on cars, steel, and aluminum remain.
The universal tariff of 10% stays in place.
Tariffs on China remain at 145%, virtually halting bilateral trade.
International reactions:
The EU paused retaliations for 90 days but may respond if no agreement is reached.
Vietnam and other developing countries avoid the worst but face the base tariff.
The UK lost its advantage with tariff alignment to the EU.
Controversies:
Sudden reversal dubbed “Full Flop.”
Suspicions of deals and illegitimate profits from market fluctuations.
Janet Yellen classified the tariffs as “self-inflicted wound” to the US economy.
Next steps:
The US aims to close agreements in 90 days, but there is skepticism about viability.
Relations with China remain tense.
Companies plan to redirect production chains (e.g., Apple to India).