A week after President Donald Trump’s “liberation day” tariff announcement, radical uncertainty roiling the global markets and lobbying from Treasury Secretary Scott Bessent, Elon Musk, and Trump allies in the U.S. Senate have convinced the president to put most non-sector-specific duties on a 90-day pause with a 10% baseline global tax and move on to a negotiating table — all the while insisting he is not changing course.
Some 75 trading partners have reportedly reached out to try to soften the blow of the most punitive U.S. tariff regime in a century — but not China, which now faces a levy of 145%, all but ensuring that market turmoil will continue. It is unclear how serious Trump is about negotiating in good faith after consistently framing tariffs as a direct mechanism to revive domestic manufacturing and reverse U.S. trade imbalances. But a proposed exporter tax credit designed to counter the impact of the tariffs on outbound shipments strongly suggests that at least some of the duties are here to stay.
Trump’s inner circle appears confident in his ability to message his way around a threat of widespread price increases. His claim that tariffs will make America “rich again” is resonating with Republicans, 87% of whom believe Trump’s tariffs will help the U.S. economy in the long run, although they are less certain of the duties’ near-term impact (46% say they will help vs. 44% thinking they will hurt).
Among all voters, 39% are hopeful the tariffs would help U.S. manufacturing (vs. 35% saying they would hurt), but an overwhelming majority, 72%, expect short-term economic pain, and 53% expect hardship to last. Net approval of the way Trump is managing the economy is down 11 percentage points from February, pushing his overall job approval rating into a negative territory — including among Black, Latino, younger and independent voters that formed his 2024 winning coalition. These voters oppose the tariffs by a wide margin, spelling an end to Trump’s brief honeymoon and suggesting a possibility of a further erosion in his support if he stays the course.
With the U.S. economy under stress and the odds of a recession relatively high, signs (albeit small) are emerging of dissent within the president’s own party — arguably for the first time since Nikki Haley ended her campaign for the 2024 Republican presidential nomination. Several bipartisan pieces of legislation are seeking to reassert congressional authority on trade and tariffs, including an ability to strike them down with a simple majority vote. None has a chance of passing (and will be vetoed by Trump if it does), but we expect dissenting voices to grow louder once Republican congressional districts experience the full brunt of the U.S. trade restrictions and China’s retaliation.
Since starting his second term, President Trump has moved swiftly to reverse some of his predecessor’s signature climate and energy policies, pausing federal funding for wind and solar projects, revoking offshore wind permits, and pushing to unwind key pollution and climate regulation. Tariffs on critical components and raw materials — including wind turbine parts, lithium-ion batteries, steel and aluminum — are set to increase the cost of power generation, undermining wind and solar’s position as the cheapest, most readily available solution (when paired with storage, grid upgrades, or backup plants) to America’s surging AI data center energy needs.
These policies are already slowing the record-level expansion of wind, solar, and battery storage, which are projected to make up 93% of new power capacity to come online this year. At least $56 billion in clean energy investments have been postponed or called off since last November, and more electric vehicle and battery plants were canceled in the first quarter of 2025 than in the past two years combined, raising questions about the future of America’s homegrown EV supply chain.
The Trump administration is betting that new regulations incentivizing fossil fuel production would deliver a meaningful boost in output despite market dynamics and existing industry conditions suggesting otherwise. In reality, while deregulating methane emissions and fast-tracking natural gas pipeline approvals could help lower costs for fossil fuel companies, tariffs on steel and aluminum would make it more expensive to build LNG terminals and drill oil wells. Tariff-induced shortages of key power grid components are likely to translate into higher costs for data centers needed to maintain an edge in AI over China, curtailing AI industry growth.
From a political standpoint, rolling back climate grants and tax incentives disproportionally impacts states that backed Trump in 2024, creating challenges for Republicans in the states and congressional districts that rely on renewables for energy generation and jobs. Ultimately, rather than usher in a manufacturing renaissance and halve consumer energy costs, as Trump pledged to do in his first 18 months in office, his policies carry risks for energy production across the board while ceding dominance in renewables (and possibly AI) to China — an outcome hardly consistent with the president’s America First agenda.
As of this writing, U.S. tariffs on roughly $450 billion worth of Chinese imports stand at 145%, and a de minimis duty on shipments worth less than $800 is 90%, targeted toward Chinese retailers Temu and Shein. Chinese tariffs on about $145 billion in U.S. exports, dominated by oilseeds and grains, stand at 84%. There is no sign that either side is ready to offer concessions. China watchers indicate that Beijing is actively considering non-tariff retaliation beyond trade blacklists and export controls on critical materials, possibly including suspended cooperation on fentanyl and precursor chemicals, curbs on U.S. soybeans and poultry, further restrictions on exports of rare earths, and targeted actions against Apple, Tesla, or American legal and consulting firms operating in China. The Bank of China has been gradually devaluing the yuan to offset the impact of the tariffs, but this tactic has its own risks and could invite additional U.S. penalties for alleged currency manipulation.
The current level of tariffs is much higher than the 60% President Trump promised on the campaign trail, and could lead to a breakdown in bilateral trade unless an off-ramp of some sort is negotiated in the near future. (A possible timeframe? 75 days until a new deadline for ByteDance to sell TikTok’s U.S. operations.) The Trump administration has additional levers it could use against Beijing, including targeting Chinese-origin goods transshipped through third countries, or goods produced by Chinese-owned companies in those countries, via trade deals it is negotiating with Mexico, Vietnam, and others. The Chinese side’s most effective lever could be the widespread hardship from disrupted agricultural shipments, component shortages, and increased costs of inputs and finished goods that could eventually translate into palpable political pressure on Republican Party leaders. But in the meantime, a tough posture against China coupled with a reprieve (albeit temporary) on the rest of the world puts Trump in a strong position to make a deal once the market pressure becomes unbearable — and claim that as a win.
