The conservative Wall Street Journal's editorial board, long one of the harshest critics of President Donald Trump's tariff regime, breathed a sigh of relief after Trump announced on Wednesday that he would be reducing the "reciprocal tariff rate" to 10 percent for all countries except China for a period of three months, still imposing a draconian tax on imports but one substantially less — for now, at least — than the one prompting observers to forecast a likely recession within the year.
Trump's initial plan had been to impose variable rates ranging from 10 to 49 percent, depending on how large the U.S. trade deficit was with the country in question. He is now claiming that this pause will give countries breathing room to negotiate with him.
"Markets celebrated with a stock-market rally on hope that perhaps Mr. Trump isn’t entirely oblivious to the damage he’s causing," wrote the board. "The rout in dollar assets reversed, at least somewhat, and the rise in the benchmark 10-year Treasury yield eased. It would be hard to find better evidence that markets believe the biggest threat to the world economy is Mr. Trump’s tariffs."
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Nonetheless, the board wrote, despite the market surge, the "tariff mayhem" is far from over.
"For one thing the Administration can’t get its story straight. Mr. Trump’s pause came not long after Treasury Secretary Scott Bessent told bankers the economy is 'in pretty good shape.' He dismissed the bond rout as normal trading. But then why the tariff pause?" wrote the board.
And then there's China, where the trade war is still very much ongoing.
"He started the latest row with a 34% tariff on top of tariffs already in place, and China responded Tuesday with the same. Mr. Trump then added 50% more, for a total U.S. tariff of 104% on Chinese goods. Beijing hit back again with 50% more, or 84% on all American exports to China, plus multiple regulatory barriers set to hit U.S. companies. Mr. Trump then lifted his China tariffs to 125%."
If Trump really wants to decouple the U.S. economy from China — a massive, daunting undertaking — he should be working to kick down trade barries with Europe, Latin America, and other U.S. allies, the board wrote. Instead, he is merely temporarily reducing the size of the new trade barriers he's putting up.
"Never bet against America, it’s said, and normally global investors don’t want to," the board concluded. "It’s a sign of the magnitude of Mr. Trump’s tariff mistake that he’s goading them into doing so. He needs a policy reversal, not a pause."