Donald Trump has hit pause on his global tariff spree — for 90 days, at least. But don’t mistake this for a full-on retreat. Think of it more like an intermission in a chaotic play where everyone’s still yelling at each other backstage.
Let’s break down why Trump made this move and what it all means for Australia and the rest of the world.
Why did Trump pause the tariffs?
Trump’s sudden decision to suspend higher tariffs wasn’t exactly born out of goodwill or a sudden epiphany about global cooperation. No, it was more like a panic button moment. After imposing hefty tariffs on nearly 60 countries overnight, the financial markets had a meltdown. The S&P 500 tanked, wiping trillions off stock values, and even the bond market — a supposed safe haven — was looking shaky.
Trump admitted that people were getting “yippy” (his words, not ours) and “a little bit afraid”, which is probably the understatement of the year.
So, Trump announced a 90-day pause on his “reciprocal” tariffs, lowering them to a flat 10 per cent for most nations while keeping China firmly in his crosshairs with an eye-popping 125 per cent tariff.
Meanwhile, over 70 countries reportedly reached out to negotiate trade deals, according to Forbes — likely more out of desperation than enthusiasm.
CNN reports that US Treasury Secretary Scott Bessent said the pause was part of Trump’s “strategy all along”.
However, Trump also told reporters that the plan “came together early this morning” after a meeting Bessent and with Commerce Secretary Howard Lutnick. “We wrote it up from our hearts.” Who knows when this was decided on.
How were these tariffs even calculated?
Here’s where things get… creative. Trump’s tariff formula is based on eliminating the US goods trade deficit with each country. In simple terms, he took America’s trade deficit with a nation, divided it by the total imports from that country, halved the result, and voilà — a tariff rate was born.
But economists have been quick to point out that this method is riddled with flaws. It ignores factors like existing trade agreements and non-tariff barriers (think regulations or subsidies). Worse still, it assumes an unrealistic elasticity rate — basically how much prices respond to tariffs — leading to inflated rates that don’t align with actual economic realities.
In short, it’s less science and more guesswork.
What does the pause on Trump’s tariffs mean for Australia?
Australia was already hit with a baseline 10 per cent tariff when these measures were first rolled out — a relatively low rate compared to some — but now that same rate applies across the board for most nations during this pause. So our “advantage” of having a lower tariff rate has effectively evaporated.
This could hurt Australian exporters who now face stiffer competition in US markets as other countries’ goods become equally taxed. And let’s not forget that Australia relies heavily on China as its largest trading partner. With China and the US locked in an escalating trade war (China retaliated with an 84 per cent tariff on US goods), any disruption in Chinese demand or supply chains could ripple through our economy too.
This morning China’s ambassador to Australia, Xiao Qian, used an op-ed in The Age to call for Australia and China to “join hands” against Donald Trump.
“Under the new circumstances, China stands ready to join hands with Australia and the international community to jointly respond to the changes of the world, resolutely uphold international equity and justice, defend the multilateral trading system, ensure the stability of global industrial and supply chains, and maintain an open and co-operative international environment,” he wrote.
Prime Minister Anthony Albanese has responded to this suggestion saying that Australia “will speak for ourselves”.
“Australia’s position is that free and fair trade is a good thing,” he continued, per the ABC.
The bigger picture: a global trade war
Make no mistake — this isn’t just about America and China slugging it out in an economic boxing ring. The fallout from their trade war could trigger a global recession. Countries like Japan and South Korea are already bracing for reduced demand for their exports, which could impact Australia’s resource-heavy economy as well.
Meanwhile, Trump’s insistence on using tariffs as both punishment and leverage has left trading partners scrambling to adapt while retaliating where they can. The European Union has announced counter-tariffs that can go up to €21 billion, targeting politically sensitive American industries (think Harley-Davidson bikes and bourbon).
“The EU considers US tariffs unjustified and damaging, causing economic harm to both sides, as well as the global economy. The EU has stated its clear preference to find negotiated outcomes with the US, which would be balanced and mutually beneficial,” the EU executive said in a statement yesterday.
What happens next?
Trump says this 90-day pause is all about giving countries time to negotiate better trade deals with the US, but let’s be real, his track record suggests more chaos ahead. If these negotiations fail or if countries retaliate further (as China already has), we could see tariffs snap back higher than ever.
In true Trump fashion, he summed it up best: “Somebody had to do it.” Whether this gamble pays off or backfires spectacularly remains to be seen. Stay tuned — it’s bound to get messier from here.
The post What Trump’s 90-Day Tariff Pause *Actually* Means For Young Aussies appeared first on PEDESTRIAN.TV .
