By JOSH BOAK and DIDI TANG

WASHINGTON (AP) — President Donald Trump’s agreement with China to temporarily slash tariffs for 90 days offered the world a bit of welcome relief. But what persists is a sense of uncertainty and the possibility that some damage from the trade war could already be done.

The Trump administration agreed after talks this weekend in Switzerland to pare back its 145% in tariffs charged on imports from China to 30%. The Chinese government chose to reduce its retaliatory import taxes on U.S. goods from 125% to 10% while the sides continue to negotiate.

Trump declared the de-escalation of the trade war a victory, saying he would soon chat with Chinese President Xi Jinping about how to preserve the financial relationship between the world’s two largest economies.

Regardless, the tariffs are now elevated from when Trump took office and the scramble to respond to the White House’s mix of threats and olive branches might leave CEOs, investors and consumers uneasy and unwilling to take risks.

Trump is going to keep tariffing

The global economy is not going to back to January 19, 2025, the day before Trump became president. Even if he routinely changes the tariff rates, the U.S. president and his aides have made it clear that most imports will be taxed at a minimum of roughly 10%.

The 10% figure has been Trump’s baseline. He gave it to most countries for a 90-day negotiating period after his April 2 “Liberation Day” tariff rollout caused a panic in the financial markets. He kept the 10% rate as part of the framework with the United Kingdom announced last week. And Trump’s new 30% tariff on Chinese goods includes 20% tied to China’s role in fentanyl and the 10% baseline applied elsewhere.

“We have many deals coming down the line,” Trump said on Friday. “But we always have a baseline of 10%.”

But Trump has also hinted that there could be exceptions. Sectoral tariffs of 25% on autos, steel and aluminum are still in place, with Trump stressing that pharmaceutical drugs will also soon face import taxes.

Trump said Monday that he told House Speaker Mike Johnson and Senate Majority Leader John Thune to include tariff revenues when looking at how to pay for their planned income tax cuts.

Reality can now anchor negotiations

Taisu Zhang, a law professor who studies comparative legal and economic history at Yale University, said the chaos from last month probably was not for nothing. Both countries were testing their strengths, with Trump stressing the importance that foreign companies placed on accessing U.S. consumers and China emphasizing its resilience to an external shock.

“As recently as February, both sides probably harbored unrealistic assumptions about each other’s economic or political weaknesses or intents,” Zhang said. “The Americans had an exaggerated sense of their own bargaining power to begin with, and the Chinese may have had an exaggerated sense of their security from American economic pressure.”

“The best thing to come out of this agreement, therefore, seems to be a stronger sense of reality on both sides,” Zhang said. In that, Zhang said, it looks like the goals of the two countries align, with China consuming more and the U.S. manufacturing more.

The stock market loved the news and could shape what happens next

The world has seen that Trump remains wary of getting on the wrong side of the financial markets. When his initial April 2 announcement of higher tariff rates fueled a selloff in stocks and rising interest rates on U.S. debt, he retreated by announcing his 90-day suspension of tariffs so that talks could proceed with nations other than China.

The S&P 500 stock index jumped 3.3% in Monday trading, helping validate the Trump administration’s decision to lower tariff rates so that talks could proceed.

Beware of the ‘bullwhip’ effect

If Trump’s 145% tariffs caused fewer boats to leave for U.S. ports, the prospect of a slightly lower tariff rate might cause a stampede of shipping containers to flow across the ocean from China. The possibility of fewer ships from China had raised the risk of empty shelves at U.S. stores, a phenomenon last seen during the COVID-19 pandemic that led to spiking prices and voter frustration.

But with the fast pivot to a lower tariff rate, the freight sitting in warehouses and factories in Asia can now be hurried onto cargo ships, causing the price of transporting those goods to rise sharply and producing congestion at ports. There is “absolutely” going to be a bullwhip effect in which the shortages now turn into a rush of new supply as companies try to beat the prospect of higher tariffs returning, said Michael Starr, vice president of growth at the logistics company Zencargo.

“They can now start shipping for the holiday season,” Starr said. “They’re going to rush as many orders out in these 90 days as possible. And yes, the vessels cannot come back as quickly into service as the freight can.”

There’s little to no certainty about what’s ahead

University of Michigan economist Justin Wolfers stressed that many people would see the 90-day talks as a short-term positive because “moving tariffs from prohibitive and insane to merely very high is good news.” But over the course of the past four months of the Trump administration, the president has floated 100% import taxes on movies made overseas, threatened Canada and Greenland with annexation and shown a relative indifference to the possible financial pain from his actions.

“So if you were to look back over those last 120 days, you would say, for as much optimism as you might feel right now, it would be crazy to feel optimistic about anything,” Wolfers said.

The U.S. economy could still end up hurting

A problem for Trump is that businesses have already made plans for the 145% tariffs he announced earlier and might be hesitant to revise them until any permanent policies are set.

It’s possible that a resilient job market can take the hits from tariffs without cracking much, just as it survived Federal Reserve rate hikes under Democratic President Joe Biden that were designed to bring down inflation. But 30% tariffs are still a cost for businesses and consumers to absorb — and that might prevent many companies from hiring and expanding their operations.

“Maybe some of those could live with 30%, at least for a while,” said Kevin Rinz, a senior fellow at the Washington Center for Equitable Growth. “But in 90 days, what are tariffs with China going to be? Will they go up or down from 30%? If up, how far? I have no idea, and if I were a firm that relies on imports from China, that would cause paralysis.”

Rinz, who worked as an economist in the Obama and Biden administrations, tried to model the impact of the labor market based on Trump’s own premise that any short-term pain from tariffs would eventually result in long-term gains. His analysis found a drop in hiring.

“It turns out, that scenario looks a lot like a recession over the next few years,” Rinz said.