President Trump's recent pause on his global tariffs, announced after concerns arose about instability in the bond market, highlights a significant shift in his trade policy. Initially defiant and mocking critics, Trump's decision to temporarily halt tariffs suggests that even he recognizes the potential for a severe economic downturn. While the temporary pause provided some market relief, analysts still forecast low growth and a significant chance of recession.
The pause, however, leaves in place a 10% tariff on most imports, a measure considered harmful by many economists. This universal tariff indiscriminately impacts various products, leading to increased prices and reduced competitiveness of American manufacturing. Though the stock market initially surged on news of the pause, the long-term economic outlook remains grim. Goldman Sachs, for example, maintained its forecast of meager economic growth and a high probability of recession.
Reactions within Trump's support base vary. Some view the pause as a masterful strategic maneuver, while critics, including Bill Ackman, have previously voiced concerns about the potential negative consequences of the tariffs.
Ultimately, the pause demonstrates that even Trump's aggressive trade policies are not without limits. While he could reinstate the tariffs, the more probable outcome suggests he will navigate a path that, while causing economic harm, avoids an immediate and major crisis. The tolerance of damage appears to be higher for those who are not among his wealthiest supporters.