"Be cool, it's gonna work out"

President Trump announced a dramatic escalation in his trade war with China, hiking tariffs to 125 percent on Chinese goods while simultaneously authorizing a 90-day pause on tariffs for every other country. The announcement came during an event with racing legend Roger Penske, where Trump framed the move as long-overdue surgery on a sick economy. "The patient is very, very sick," he said. "You have to do surgery."

The tariff strategy and its rationale

Trump described the tariff hike on China as a direct response to Chinese retaliation against earlier U.S. tariffs. For the rest of the world, the 90-day pause creates a negotiating window. "A deal could be made with every one of them," Trump said, including China. "They'll be fair deals for everybody. But they weren't fair to the United States. They were sucking us dry."

He argued that the U.S. national debt of $36 trillion exists for a reason: other countries took advantage of American trade openness. "Somebody had to pull the trigger," he said. "I was willing to pull the trigger." Trump contrasted himself with previous Democratic leaders, noting that Chuck Schumer and Nancy Pelosi had talked about tariffs for decades but never acted. "Everybody knew you had to do it, but they never had the guts to do it."

The bond market and flexibility