U.S. President Donald Trump’s 90-Day Pause on Tariffs Leave Stock Markets in Limbo

U.S. President Donald Trump’s unpredictable global tariffs continue to upend relations with the nation’s closest allies. Meanwhile, President Trump’s trade war, unexpected 90-day pause on tariffs, ramped-up tariffs on China, backpaddling on some tariffs against China, and promise that no country is “off the hook” on U.S. tariffs, continue to leave the stock market in turmoil.

How Is President Trump’s 90-Day Pause on Tariffs Impacting Stocks?

On February 1, President Trump announced 25% tariffs on goods from Canada and Mexico and 10% tariffs from China. The tariffs were supposed to take effect on February 4. But, on February 3, President Trump announced a one-month pause on those tariffs after each country promised to beef up its border enforcement.

President Trump’s 10% tariffs on goods from China still came into effect on February 4. Despite easing tariffs on Canada and Mexico, the stock market continued to fall. From February 3 through April 1, the S&P 500 fell 6.75% while the Nasdaq fell more than 11%.

On April 2, President Trump unveiled his promised tariffs on the rest of the world. Global stocks fell even further. By April 4, the S&P 500 was deep into correction territory, falling 16.0%, while the Nasdaq was down 20.5%. From February 3 through to April 4, the TSX had lost 9.2% of its value.

In a stunning reversal, President Trump announced an unexpected 90-day pause on all reciprocal tariffs, with the exception of China. President Trump actually increased his tariffs on China to 125%, then hiked them to 145%, after China announced additional retaliatory tariffs against the U.S.

Massive tariffs against all goods from China, especially electronics, would seriously impact U.S. consumers. So, on April 12, the White House said computers and other electronic devices would be exempt from the punishing tariffs against China. One day later, though, President Trump backtracked and said those exemptions were false, and that instead, “they are just moving to a different Tariff bucket.”

Will the 90-Day Tariff Pause Help the Canadian Economy?

The stock market likes certainty, and President Trump’s wavering tariffs continue to take their toll on stocks. Initially, after announcing a 90-day pause on reciprocal tariffs, stocks jumped, but the next day, the euphoria had worn off. What happens after the 90 days?

Can President Trump really negotiate trade agreements with approximately 90 countries in less than 90 days? The markets are not convinced. Neither are economists.

Forecasters believe that despite a tariff pause, the U.S. economy will slow to a standstill or slip into a recession. Economists now think the U.S. economy will stall this year, growing just 0.8%, down from a 1.7% prediction in March. The odds of a U.S. recession have increased to 47% from 25% in February.

In Canada, President Trump’s unpredictability has forced experts to lower their outlook for the Canadian economy. Expectations are for the Canadian economy to grow 1.2% in 2025 and 1.1% in 2026; that’s down significantly from predictions last month of 1.7% for this year and 1.6% for next year. That’s a best-case scenario; other analysts expect the Canadian economy to enter a recession.

Weakened guidance and falling business and consumer sentiment could push the Bank of Canada to cut interest rates at least two more times in 2025. The central bank has already cut interest rates for seven consecutive meetings. The last time was in March, to 2.75%.

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