In a move that sent a message to global markets amid the trade war, the U.S. President Donald Trump announced a temporary pause on proposed tariffs and doubled down the fight against China. The White House will hold for 90 days the established tariffs for most countries except for the Chinese market, whose tariffs were raised to 125% on Wednesday.
The government announced that all countries that had not retaliated against U.S. tariffs would receive a reprieve (and only face a blanket U.S. tariff of 10%) until July. Trump emphasized the move is not permanent and didn’t rule out reintroducing tariffs for those who fail to meet “fair trade expectations.”
The impact was immediate, but not definitive. After a relevant recovery in the aftermarket, the S&P 500 fell approximately 5% this morning. In Hong Kong, the Hang Seng Index raised 2% today. In the German stock market, the DAX index went up by 4,5%.
Geopolitically, the decision injects uncertainty into US and relations. The pause is perceived by economists as a market-soothing measure, but one that doesn’t resolve structural tensions. Regarding this volatility scenario, specialists are bringing the recession talk back, but main investment banks reviewed their recommendations after the pause.
Goldman Sachs briefly raised its 12-month recession probability to 65% early Wednesday, only to walk it back to 45% within an hour of Trump’s tariff pause announcement. “As a result [of the pause], we are reverting to our non-recession baseline forecast with GDP growth of 0.5% and a 45% probability of recession,” analysts wrote on a client note.
Trump’s tariff pause might buy some time for political perspectives and short-term economic indicators, but it doesn’t eliminate the fundamental tension at the center of the trade war. For fintech players navigating a fragile supply ecosystem and cross-border regulations, the pause is more a postponement than a resolution.
