Trump Tariffs: Trump’s 90-day tariff pause may seem like good news. It is not.

Tariffs remain high, and uncertainty deepens

On 9th April, a week after his Liberation Day announcements, Trump announced yet another change in the US’s tariff policy: there will be a 90 day pause on the “reciprocal” tariffs announced a week prior, except for China whose tariff rate increased to a whopping 145%. The details of the 90 day pause are as follows:

• For 90 days (i.e. until 9th July 2025), all countries (excl. China, Mexico, and Canada) will face 10% tariff on goods exports to the US
• China faces a 145% tariff on all exports to the US, effective immediately
• Tariffs on Mexico and Canada do not change: they are at 25% for non-USMCA compliant products, and 10% on Canadian energy
• Auto and steel/aluminum tariffs remain subject to the 25% tariff (which is not cumulative)
• Pharmaceuticals, semiconductors, copper, and lumber remain exempt from tariffs, although this is because they are likely to receive their own set of tariffs in the coming days
• Oil and gas imports, as well as certain rare minerals are exempt from all tariffs

The S&P rose nearly 10% following the announcement, as investors treated the pause as good news. The reality is much more nuanced.

The good:

It is unclear what exactly caused Trump to back down (the overwhelming financial market reaction or a calculated, premeditated plan). However, for several countries, it is ultimately good news that he did: markets like Vietnam, Germany, and South Africa now face a lower tariff rate for 90 days. While still a significantly higher rate than just a few months ago, the temporary reprieve will dull the impact to exports for around 60 countries in the short-term. Crucially, multinationals gain a 90-day window to adjust their supply chains, build inventories in the US, and even lobby for exemptions.

The bad:

The more it changes, the more it stays the same: Trump’s approach to trade policy remains abrupt, reactive, and unpredictable, making planning virtually impossible for multinationals. Beyond the tariffs themselves, this persistent policy uncertainty is already damaging the US economy: investment is all but paused as businesses await more clarity, while indicators of consumer sentiment are plunging. The 90-day window will only exacerbate the uncertainty, notably given that the Trump administration is negotiating with around 60 countries at once. The US’s trading relationship with the world will remain highly unclear for at least the remainder of 2025. It is made particularly difficult by the fact that US trade policy now centers almost entirely around Trump: the US president hinted at potential exemptions for US companies, but said this would be based on “instinct” – a fundamentally unpredictable and arbitrary factor.

The ugly:

The US and China, the world’s two largest economies, are decoupling as they engage in an all-out trade war. The imposition of 145% tariffs on China, and the retaliatory measures from Beijing, will be incredibly disruptive to supply chains in electronics, machinery, and chemicals, amongst others. It will lead to a sharp slowdown in both countries, eliminate US-China trade by the end of 2025, and heighten geopolitical risk: tariff wars could plausibly spill over into a wider diplomatic confrontation. More broadly, the US’s average effective tariff rate now exceeds 27.4%, the highest globally, and higher than immediately after Liberation Day: the global trade landscape is undergoing a reset marked by fragmentation, unpredictability, and a lack of coherent rules.

Business implications:

• Use the 90-day window to frontload shipments, adjust pricing strategies, and build inventory buffers in the US where feasible. To be prudent, assume you have less than 90 days.
• Scenario planning is now non-negotiable: firms should be using scenarios that feature a wide range of outcomes, modelling what higher/lower tariffs mean for them, as well as how different
• Expect the US-China trade war to last for the remainder of 2025. The 145% tariff marks a point of no-return, and a thaw in the near-term is highly unlikely. Firms should not plan on tariff relief and instead build assumptions around continued disruption.
• Engage in lobbying to secure exemptions, and consider coordinating these lobbying efforts with trade associations and other groups. Ensure you are actively and publicly highlighting any new or existing investments in the US.
• The trade war with China could escalate into broader geopolitical confrontation. Stress-test geopolitical risk scenarios.