Trump’s Tariff Pause and Trade War With China, Explained

Donald Trump blew up his tariff agenda on Wednesday, writing in a Truth Social post that he is instituting a “90-day pause” on the bulk of the import taxes he had announced a week earlier. The surprising reversal came as financial markets were tanking, and as the president and his administration insisted that he was never changing his policies — which were going to make Americans rich.

“BE COOL!” Trump wrote Wednesday morning hours before announcing the pause. “NOW IS THE TIME TO BUY!!!” he added in a subsequent post, lending weight to allegations that his cronies are getting rich as financial markets fluctuate amid his on-again, off-again tariff agenda.

The tariffs are most certainly not off, though, despite the pause. Trump may have put some of the worst of them on ice, but goods coming into the U.S. will still be taxed plenty, and American consumers are still expected to foot the bill.

Here’s what you need to know.

What changed, exactly?

Trump announced that he had “authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately.”

Trump last Wednesday announced a 10-percent tariff on most goods imported into the United States, as well as higher tariffs for a list of nations the administration felt were ripping off America (or something). The only thing that is paused is these higher tariffs, which means there is still a 10-percent blanket tax on all imported goods — which is significant.

The previously announced 25-percent tariffs on all imported cars and all imported steel and aluminum are also still in effect.

What about China … and TikTok?

Trump is easing up on most nations, but cracking down on China, which has responded to the tariffs by accusing the U.S. of blackmail and vowing to retaliate. The Trump administration increased the tariff on Chinese goods to 104 percent on Tuesday. China responded by increasing its tariff on U.S. goods to 84 percent, after which Trump announced he was hiking the tariff against China up to 125 percent. The White House clarified on Thursday that the total tariff against Chinese goods is actually at 145 percent, given the 20-percent supposedly fentanyl-related tariff imposed earlier this year.

This is all very bad for working Americans. China is the world’s second-largest economy, and America’s third-largest trading partner. Jason Furman, an economics professor at Harvard who chaired Barack Obama’s Council of Economic Advisers, explained on X that the escalating trade war with China will basically cancel out any pricing relief consumers may experience as a result of the 90-day pause. “That is probably more inflationary than the original liberation day tariffs — with the extra 71% on China outweighing the reduced reciprocal tariffs on the 70 countries,” Furman wrote of the 125-percent tariff, which has since increased to 145 percent.

The impasse has put the prospect of striking a deal with China to sell TikTok to an American buyer in dire straits. Trump admitted last week that his tariff announcement halted talk of a deal, forcing him to sign an order of questionable legality extending the deadline to sell TikTok and keeping the app alive in the U.S. for the time being. The situation has worsened since then, obviously. “There will not be a TikTok deal,” Fox Business correspondent Charlie Gasparino said on Wednesday. “The White House has confirmed to me that that is basically off the table.”

Trump was asked about the status of a deal in the Oval Office. “It’s moving along,” he said. “Obviously I would say right now China is not exactly thrilled about signing it. … We’re going to have to wait to see what’s going to happen with China.”

So the tariffs are still expected to hit American consumers hard?

Yes, very much so.

How has the market reacted?

Financial markets cratered so hard as a result of Trump’s “Liberation Day” announcement last Wednesday that they couldn’t help but skyrocket after he announced the 90-day pause, even if the details were hazy. Trump tried to spin this as a win. “We’re up close to 3,000 points,” he told reporters in the Oval Office. “Nobody’s ever seen anything like that. Is that a record? Who would have thought we’d have a record like that.”

This isn’t much of an achievement, given that the markets are still down from where they were before Trump announced the “Liberation Day” tariffs last week. Similarly, brokerage houses like Goldman Sachs and JPMorgan have tamped down their odds of the United States going into a recession, but JPMorgan said Wednesday night that it still believes a recession by the end of the year is “more likely than not.”

The markets corrected a little following Trump’s announcement on Wednesday, but they dropped again on Thursday, and it’s hard to imagine that the president’s back-and-forth tariff agenda is going to inspire a ton of economic trust.

What are Trump and his administration saying?

Trump upended the global economy in what he described as a “Liberation Day” for Americans, tanking financial markets to the brink of total disaster. He assured everyone it was all part of the plan, insisted he was not backing away, and suggested he could work out deals with the nations affected. He then caved and abandoned the plan without any deals in place, a move his administration officials have been tripping over themselves to praise as a sign of his genius.

“This was [President Trump’s] strategy all along,” Treasury Secretary Scott Bessent said, dismissing the idea that the move came out of concern for the plummeting bond market.

“You have been watching the greatest economic master strategy from an American President in history,” Deputy Chief of Staff Stephen Miller wrote on X.

“Many of you in the media clearly missed the art of the deal,” said Press Secretary Karoline Leavitt. “You clearly failed to see what President Trump is doing here.”

Trump then threw them all under the bus by admitting the reversal was due to market panic. “I thought that people were jumping a little bit out of line,” he told reporters later on Wednesday. “They were getting yippy, they were getting a little bit afraid.” When Trump was asked if the cratering bond markets had anything to do with the decision, he said that he was watching the market last night and “people were getting a little queasy.”

Trump added that he, Bessent, and Commerce Secretary Howard Lutnick wrote the Truth Social post announcing the reversal without the help of lawyers. “It was written from the heart,” Trump said.

What comes next?

Trump and his administration have been touting how nations have been lining up to cut deals to avoid getting hit with tariffs. “These countries are calling up kissing my ass,” told Republicans at a dinner on Tuesday. “They are dying to make a deal.”

The expectation seems to be that the administration is now going to spend the next three months striking bilateral trade deals with dozens of nations. It’s unclear how this is going to happen on such a short timeline, and the White House isn’t providing many details. National Economic Council Director Kevin Hassett said on Thursday that the key figures are going to have a big meeting about it on Thursday, but wouldn’t name any of the countries who want to make a deal.

Trump also said on Wednesday that he will consider exempting some American companies from the tariffs, which aligns with his larger mission of tailoring the federal government around the interests of the wealthy.

Meanwhile, the markets are dropping again, the situation with China is worsening, and Hassett is insisting that the baseline 10-percent tariffs are going to remain in place. “It would take some kind of extraordinary deal to go below there,” he told CNBC on Friday.

Of course, it would be foolish to trust anything at all Trump or his administration have to say about the president’s tariff agenda — or anything.