President Donald Trump recently announced a 90-day pause on tariffs on dozens of countries except China.
According to Treasury Secretary Scott Besset, the decision was made after over 75 countries reached out to the U.S. to reach an agreement on better trade.
A universal 10% tariff will remain in place for the goods that come into the U.S., regardless of the country. Tariffs will also remain on steel, aluminum and imported vehicles.
The pause was announced online in a Truth Social post alongside an announcement that tariffs on China will be raised upto 125% because of their “lack of respect.” The countries that did not retaliate were reportedly given the 90-day pause.
The administration’s reversal announcement came after the 27-nation EU voted to approve the first phase of retaliatory measures against the U.S.’s tariffs on steel and aluminum. Although the full list was not confirmed, a draft first obtained by CNBC in March included metals, clothing, and foods such as chicken and grains.
“The EU considers US tariffs unjustified and damaging, causing economic harm to both sides, as well as the global economy. The EU has stated its clear preference to find negotiated outcomes with the US, which would be balanced and mutually beneficial,” the European Commission said. “These countermeasures can be suspended at any time, should the US agree to a fair and balanced negotiated outcome.”
The 90-day pause had immediate effects as global stocks surged by 7.9%. Still, advisors at JPMorgan Chase are warning that a US and global recession is on the horizon. Per CNN, the bank is still projecting a 60% chance of an international and national recession even after the pause was announced.
“Combined with the ongoing policy chaos on trade and domestic fiscal matters, along with the still-large losses in equity markets and hit to confidence, it remains difficult to see the US avoiding recession,” said JPMorgan Chase advisors. “We believe that the US war on trade is far from over, and today was merely the end of the beginning.”
Even with the pause, economists warn that, with the 125% tariff on China, the effective average tariff across all nations will still be above 20%. Costs across all goods, including cell phones and cars, are expected to rise. With tariffs, although importers pay them, they pass the cost to consumers, leading to inflationary costs on all goods given the extra duty.
The extra burden of rising costs comes as officials raise the alarm on increased interest rates of bonds and falling stock prices, leading to increased costs for purchasing homes, paying off credit card debts and obtaining loans as a business.
With the 10% universal tariff still in place, tariffs are projected to be 7.5 times as upended as the 2018 to 2019 trade war, per J.P. Morgan.
In the clip below, Karen Hunter examines whether these tariffs could lead the country into a war.
