President Donald Trump's recent decision to pause certain tariffs for 90 days has done little to ease growing concerns over a global economic downturn. The move, aimed at offering temporary relief to markets, was met with immediate retaliation from China, which imposed a steep 125% tariff on U.S. imports. Beijing denounced the U.S. trade strategy as “bullying,” signaling a continued escalation of tensions between the world’s two largest economies.

Markets initially responded positively to Trump’s announcement, with the S&P 500 recording a 9.5% surge and the Nasdaq jumping 12.2%—its second-largest one-day gain in history. The Dow Jones Industrial Average also climbed nearly 8%, reflecting short-term optimism. However, the rally was short-lived as investors quickly shifted focus to the long-term impact of unresolved trade disputes and signs of economic stress.

Despite the pause in tariffs, global trade tensions remain high. China’s retaliatory measures and strong statements have deepened concerns of economic decoupling. The European Union has also expressed cautious skepticism, indicating that it may resume planned counter-tariffs if meaningful progress is not achieved through negotiations.

Leading economic analysts have warned that the underlying risks of recession persist. Goldman Sachs estimates a 45% likelihood of a U.S. recession, while the Yale Budget Lab reports that current average tariff rates are the highest they’ve been in over a century. Larry Fink, CEO of BlackRock, described the ongoing tariff measures as unprecedented and warned that the economy may already be in a recession.

Consumer inflation expectations have also soared to levels not seen since the early 1980s. Despite some optimism from wealth managers such as UBS, who upgraded U.S. equities to “attractive,” overall investor sentiment remains cautious. Treasury bond yields have risen significantly, further signaling market unease.

While the tariff suspension has bought some time, experts agree that only sustained diplomatic efforts and a clear trade policy direction can restore investor confidence and prevent a deepening economic slowdown. Without structural resolution, the risk of a global recession remains firmly on the horizon.