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CNN
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Tracking the trade war in 2025 feels a bit like getting repeatedly punched in the gut.
We suddenly have a 90-day detente in a manufactured crisis: The US has lowered its 145% tariffs on most Chinese imports to 30%, and China has reduced its 125% tariffs to 10%.
In the distorted reality of Trump 2.0, that slightly lighter punch in the gut is what counts as relief.
(For the “Arrested Development” fans out there: Remember when Gob keeps punching Buster as a motivational tactic, saying, “Now, when you do this without getting punched, you’ll have more fun”? That’s more or less how businesses are feeling.)
Markets soared on the China news Monday, recouping all the losses that had piled up after the president’s April 2 tariff rollout.
But let’s be clear: Wall Street is cheering not because 30% tariffs are such great news — they’re cheering because it looks like President Donald Trump may not have the stomach for his own radical economic policy after all.
Under any other circumstances, markets would have panicked over 30% tariffs on America’s third-largest trading partner — along with 10% universal tariffs and 25% sector-specific tariffs. But after weeks of tariff turmoil, Trump has already pushed financial markets to the brink, creating a baseline expectation of economic pain.
If investors were popping Champagne on Monday, it was not because they think we’re out of the woods but because the odds of a recession have gone from likely to more of a coin flip.
Even with the latest detente, consumer prices are expected to rise nearly 2% because of the tariffs that remain in place — amounting to $2,800 per household for the year, according to an analysis by the Yale Budget Lab. Job losses are expected to hit an extra 456,000 by the end of the year, pushing the unemployment rate up an additional 0.4 percentage point by the end of 2025, the report said.
US economic growth is still expected to slow, Kathy Bostjancic, chief economist for Nationwide Mutual Insurance Company, said in a note Monday. She added that “there already has been some dampening effects on activity, and DOGE-related efforts to reduce the size of the government will also weigh on employment and activity later this year.”
The Trump administration’s bigger-than-expected pullback on Chinese tariffs underscores businesses’ major complaint, which is that Trump’s goals and priorities appear to shift by the hour.
“What are the chances that we have 90 days of calm ahead of us?” economist Justin Wolfers told my colleague Matt Egan on Monday. “Today we have good news, but what would really be good news is if someone just took the button away from him.”
Unsurprisingly, the White House touted the China breakthrough over the weekend as another Trump win on the heels of a “landmark trade deal” with the United Kingdom last week (which, as I wrote then, was not actually a deal so much as an intent to work toward a deal that would ultimately affect only a sliver of America’s global trade pie).
Yes, a 30% tax is certainly more manageable than 145%. That 115-percentage-point drop could be the difference between a total supply chain meltdown and a mere slowdown in trade between the world’s two largest economies.
But the agreement with China is only a “win” if you squint through a MAGA lens. Trump set the house on fire and then fetched a single pail of water. It’s a start, perhaps. But some of the damage won’t be undone, and he’s still playing with matches.