Fact Check: does trump decision to withdraw tariff for 90 days affect the economy badly despite the increase in stock market?

The Impact of Trump's 90-Day Tariff Suspension on the Economy and Stock Market

Introduction

The recent announcement by former President Donald Trump to suspend most tariffs for a period of 90 days has sparked debate regarding its potential effects on the economy. While the stock market reacted positively, with significant gains reported, questions remain about the broader economic implications of this decision. This article examines the claim that Trump's tariff suspension could negatively affect the economy despite the stock market's rise.

What We Know

1. Tariff Suspension Announcement: On April 8, 2025, Trump announced a temporary halt to most tariffs for 90 days, while simultaneously increasing tariffs on Chinese imports to 125% 18. This decision was framed as a response to a global market downturn and aimed at reducing tensions in international trade, particularly between the U.S. and China 1.

2. Market Reaction: Following the announcement, the stock market experienced a significant surge. The S&P 500 index rose by 9.5%, marking its largest single-day gain since 2008 24. Other indices, such as the Dow Jones Industrial Average, also saw substantial increases, with a reported climb of 2,962 points 9.

3. Economic Context: The broader economic context includes ongoing concerns about inflation, supply chain disruptions, and the overall health of the global economy. The trade war with China has been a significant factor in these economic challenges, leading to increased prices for consumers and businesses alike 17.

Analysis

Evidence and Source Reliability

• Source Credibility: The sources cited include established news organizations such as the Associated Press, New York Times, and Reuters, which are generally considered reliable. However, it is essential to evaluate the potential biases in reporting. For instance, the New York Times and Associated Press may have editorial slants that could influence their framing of economic news 25.

• Market Gains vs. Economic Impact: While the immediate stock market reaction was positive, it is crucial to question whether stock market performance is an accurate indicator of economic health. Stock prices can be influenced by investor sentiment, which may not always correlate with underlying economic fundamentals. The sharp rise in the stock market could reflect short-term optimism rather than long-term economic stability 410.

• Conflicting Perspectives: Some analysts argue that the tariff suspension could lead to a more stable economic environment by reducing uncertainty for businesses and consumers 6. Conversely, others warn that increasing tariffs on China could exacerbate tensions and lead to retaliatory measures, potentially harming U.S. economic interests in the long run 8.

Methodological Considerations

• Data Limitations: The analysis of the economic impact of tariff changes often relies on complex economic models that can vary widely in their assumptions and predictions. More detailed economic data, such as consumer spending, business investment trends, and inflation rates, would provide a clearer picture of the potential long-term effects of the tariff suspension 7.

• Need for Further Information: Additional insights into how businesses are responding to the tariff changes, as well as consumer sentiment data, would be beneficial in assessing the overall economic impact. Furthermore, understanding the geopolitical ramifications of the tariff increase on China could provide a more comprehensive view of the situation.

Conclusion

Verdict: Partially True

The claim that Trump's 90-day tariff suspension could negatively affect the economy is partially true. Evidence indicates that while the stock market reacted positively to the announcement, suggesting short-term optimism, the long-term economic implications remain uncertain. The increase in tariffs on Chinese imports could counteract any potential benefits from the suspension, leading to conflicting outcomes for different sectors of the economy.

It is important to note that the stock market is not always a reliable indicator of overall economic health, as it can be influenced by investor sentiment rather than fundamental economic conditions. Additionally, the analysis is limited by the availability of comprehensive economic data and the complexity of economic modeling, which can yield varying predictions based on different assumptions.

Readers are encouraged to critically evaluate information and consider multiple perspectives when assessing the potential impacts of policy changes like tariff suspensions.

Sources

1. Trump limits tariffs on most nations for 90 days, raises taxes on ... - AP News
2. Markets Soar After Trump Backs Down on Tariffs - New York Times
3. Stock market highlights: Trump pauses tariffs, sending S&P 500 surging ... - AP News
4. Wall Street rebounds sharply after Trump announces 90 ... - Reuters
5. Trump Reverses Course on Global Tariffs, Announcing 90- ... - New York Times
6. Trump tariffs live updates: Stocks surge after 90-day pause announced ... - NBC News
7. Why did Trump reverse tariffs? What to know after 90-day pause. - USA Today
8. Donald Trump Explains His 90-Day Tariff Pause: People Were Getting ... - Newsweek
9. Stock markets rally after Trump pauses most tariffs for 90 days - ABC News
10. U.S. stocks shoot to historic gains after Trump pauses most ... - PBS NewsHour