It’s fair to say that President Donald Trump‘s “Liberation Day” didn’t live up to its name—at least around the rest of the globe. Maybe the label fits better today, with trade once more being freed by the mercurial leader of the free world.
Trump announced his decision to pause the so-called “reciprocal” tariffs, which covered some 75 nations, for 90 days, in a midday post on Truth Social. China, which Trump called “disrespectful,” got the opposite treatment, with tariffs being ratcheted up on Chinese-made goods (ie. everything in your house) to 125 percent. The “baseline” 10 percent universal tariffs remain in place, as well.
(China, the U.S.’s third-largest trading partner, was also a target of trade restrictions in Trump’s first term, and has since been looking for ways to separate itself from global trade’s dollar-based economy.)
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Was the presidential pivot a surprise? The market certainly took it as one, even as much of Trump’s inner circle is made up of billionaires with huge market portfolios who were suffering along with the rest of us too scared to look at our 401(k)s. Trumped claimed his 90-day pause was because people were getting “yippy.” It’s likely that some of them were his closest advisors and Mar-a-Lago buddies.
Over the course of just a few days, markets around the world had skimmed along just above bear territory, making many people wonder what was going on with the man who based his claims to success in his first term in large part on the success of the stock market. The benchmark S&P 500 was up nearly 68 percent in his first term. The index was down as much as 15 percent this time around, at least until Wednesday’s shock announcement sent it soaring nearly 10 percent.
While Trump’s Tariffs of Terror have been a scary ride for investors (and the rest of us) so far, the actual impacts are yet to be felt. Trump’s back-and-forth negotiations with Canada and Mexico have yet to lead to any pain at the point of sale, and the short-lived “reciprocal” tariffs on everyone else did not yet have the chance to increase costs before they were paused.
As White House press secretary Karoline Leavitt said Wednesday, “Many of you in the media have clearly missed the Art of the Deal.”
Maybe so. But one thing seems certain: over the last week, we have assured the world that its most important economic engine can no longer be trusted, even if its leader does put the bulk of the tariffs away for a time—or even forever. Business loves stability, as everyone knows from mob movies, and a trade war is anything but.
Trump now says that some 75 countries are coming to the table to negotiate fresh trade deals with the United States — and that’s just what he wanted all along. What he probably didn’t want is a distrust in the American economy that will take years—if not an eternity—to shake.