Trade Deals in the Time of Tariffs

President Trump made a prudent course correction in his tariff program yesterday, holding firm to the 10% global tariff but suspending the “reciprocal tariffs” on all countries except China for 90 days while negotiations proceed. Snapping high tariffs into effect before talks could even begin had been a weak point in his strategy, creating substantially larger costs and disruptions than necessary with few attendant benefits.

Such a pause falls more closely in line with the steady course of action I have previously suggested. I first underscored the need for “a clear schedule of gradually increasing tariffs” in February, at the outset of the conflicts with Canada and Mexico. In March, I recommended a six-month grace period as an element of any broader plan and highlightedpredictable timelines as a must-have for Liberation Day. Two days after Trump’s sweeping announcement, I reiterated that “a predictable and credible phase-in for tariffs can achieve nearly the same positive effects of an immediate imposition, while greatly reducing the costs.” The day before he announced his course correction, I wrote of the reciprocal tariffs in the New York Times that “the first priority should be to scale them up more gradually, to give markets and allies time to adapt.”

The 90-day suspension gives trading partners who did forgo retaliation and express a desire to deal the time to do just that. Much productive investment would have been on hold during the negotiations anyway; now, many of the associated disruptions of large and immediate tariffs can be avoided. And while some supporters of the more aggressive tariff schedule worry that a grace period will reduce leverage by weakening the credibility of the tariff threat and the ongoing pressure to find a solution, the slightly slower approach improves the American position in important ways too.