Trump’s Trade Pause Still Leaves U.S. With Highest Tariffs Since 1909

The recent pullback in Trump’s trade war isn’t as significant as markets initially believed. Despite a 90-day pause and reduction to 10% for most reciprocal tariffs, U.S. consumers still face the highest effective tariff rates since 1909.

PIMCO economist Tiffany Wilding warns this represents an economic shock unseen since the 1920s-30s, estimating each percentage point increase in tariffs reduces U.S. growth by 0.1% while adding similar amounts to inflation. She predicts a likely U.S. recession with core inflation potentially reaching 4.5%.

The situation with China has worsened particularly, with tariffs on Chinese goods now at 145% according to the White House. Analysts describe this as a narrowing but deepening of the trade war, potentially leading to a “full decoupling” between the world’s two largest economies. TD Securities calculates the import-weighted average U.S. tariff has actually increased to 26.2% from 23.9% since April 2nd.