Donald Trump | Photo: AP
Washington: President Donald Trump made a dramatic U-turn in trade policy on Wednesday, pausing import tariffs he had announced just 13 hours earlier. The 90-day suspension of taxes on imports from dozens of countries came as Trump escalated his trade conflict with China. The unexpected move triggered a strong stock market rally on Wall Street but created confusion among businesses, investors, and international trading partners about the administration’s true intentions.
Trump’s decision followed four days of steep declines in global markets, caused by the sweeping tariffs he had unveiled the previous week. The financial turmoil sparked fears that the US and global economies could slide into recession.
White House press secretary Karoline Leavitt described the policy shift as part of a larger negotiation strategy. However, critics outside the administration viewed it as a retreat driven by market pressure and concerns over the economic damage caused by Trump’s abrupt imposition of import taxes.
“Other countries will welcome the 90-day stay of execution — if it lasts — but the whiplash from constant zig-zags creates more of the uncertainty that businesses and governments hate,” said Daniel Russel, vice president at the Asia Society Policy Institute.
“The Administration’s blunt-force tactics have rattled allies, who see the sudden reversal as damage control following the market meltdown, rather than a pivot to respectful, balanced negotiations.”
‘Liberation Day’ tariffs and the swift reversal
On Wednesday, April 2 — a date Trump referred to as “Liberation Day” — the president declared new tariffs on nearly every country, disrupting the international trade system. A 10 percent baseline tariff on imports from most countries took effect on Saturday.
At midnight on Wednesday, Trump introduced additional “reciprocal” tariffs against countries he accused of unfair trade practices. But later that day, he suspended those tariffs for 90 days, explaining the delay was to give other nations time to negotiate with him and his trade advisers.
One country was excluded from the temporary relief — China. Trump increased tariffs on Chinese goods to a sharp 125 percent in retaliation for Beijing’s own tariffs against the US The 10 percent baseline tariffs on other countries remain in effect.
Economic impact and job losses
The president’s shifting trade tactics — including earlier duties on cars, steel, aluminium, and goods from Mexico and Canada — have already affected several industries. Companies delayed or cancelled investment plans, while some temporarily laid off workers amid uncertainty about the administration’s trade policy.
Carmaker Stellantis suspended operations at two plants in Canada and Mexico after Trump introduced a 25 percent tariff on imported cars, leading to the temporary loss of 900 jobs at factories in Michigan and Indiana.
Cleveland-Cliffs laid off 1,200 workers at a Michigan factory and a Minnesota iron ore mine due to reduced demand from the auto industry. The company stated it would resume production once auto manufacturing returned to the US
Federal reserve and corporate caution
Minutes from the Federal Reserve’s 18–19 March meeting, released Wednesday, revealed that many officials reported that businesses were delaying hiring because of policy uncertainty.
Delta Air Lines also noted a drop in demand for domestic and business travel, citing trade-related uncertainty. In a call with investors, the airline said it would reduce capacity and declined to give a full-year financial outlook.
“Right now, it’s hard to know how this is going to play out, given that this is somewhat self-imposed,” said Delta CEO Ed Bastian.
“I’m hopeful that sanity will prevail and we’ll move through this period of time on the global trade front relatively quickly.”
Confusion among businesses
Despite the temporary suspension, companies continued to seek clarity on the specifics of Trump’s trade plans. Jeff Jaisli, CEO of New Jersey-based importer/exporter Jagro, said the president’s post on Truth Social had made things “even worse” and more confusing.
“We’re scrambling to find correct information and procedures for entries we’re processing NOW in real time,” he said via email. Jaisli added that there was no guidance available on official government websites.
Earlier, Jaisli had described the tariff situation as “a grenade that was thrown into the room that’s going to cause chaos.”
Trade war with China escalates
Trump’s trade war with China has intensified. Even before the increase to 125 percent, China had already imposed retaliatory tariffs of 84 percent on US goods.
The World Trade Organization’s director-general, Ngozi Okonjo-Iweala, warned that this growing trade conflict could cut US-China merchandise trade by 80 percent and seriously harm the global economy.
“Of particular concern is the potential fragmentation of global trade along geopolitical lines,” she said in a statement on Wednesday. “A division of the global economy into two blocs could lead to a long-term reduction in global real GDP by nearly 7 percent.”
Okonjo-Iweala stressed that the ripple effects would particularly impact developing economies and urged countries to maintain an open trade system and work together to resolve differences.
Businesses hesitate amid rising tariff costs
American companies are now trying to adjust to high tariffs on goods from China. Jessica Bettencourt, CEO of Klem’s, a family-run store in Massachusetts, said the increased costs have made her stop ordering fourth-quarter holiday products and reassess autumn clothing and footwear orders.
“The worst thing is uncertainty and we have massive uncertainty,” said Jason Goldberg, chief commerce strategy officer at Publicis Groupe.
“No one can make any moves. Everybody is trying to save as much cash and defer any unnecessary expense. People are getting laid off. Orders are getting cancelled. Expansion plans are being put on hold.”
AP
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