President Trump previously said he believes “tariff” is the most beautiful word in the English language. These days, it seems like “pause” might be gunning for his top spot.
What happened: The U.S. is pausing its reciprocal tariffs for 90 days, granting all countries that didn’t retaliate a reprieve on the same day the tariffs came into effect. China, which retaliated with its own 84% tariff on U.S. goods, will face a 125% tariff.
- The White House says that all other tariffs will be set at 10% while the pause is in place, though Canada and Mexico will reportedly still be exempted from that levy.
Why it matters: The 90-day pause came as a growing number of economists have been warning that a tariff-induced recession was on the horizon. While those fears won’t evaporate, the White House’s 180 does show a willingness to bend on its signature policy.
- Before the pause, JPMorganChase CEO Jamie Dimon said a U.S. recession is the likely outcome of the tariffs, while the bank itself upped the odds of a global recession to 60% from 40% in March.
- Prime Minister Mark Carney said earlier this week that the risk of a U.S. recession has risen significantly, while former U.S. Treasury Secretary Larry Summers warned that it is more likely than not that there will be a recession.
Big picture: Given how dependent Canada’s economy is on our southern neighbour, experts say if the U.S. falls into recession, we are almost certain to experience one as well. The longer these tariffs are shelved, the less likely that is to happen.—LA