The writer is the president of Queens College, Cambridge, and serves as an adviser to international firms Allianz and Gramercy.

In a surprising turn of events, the landscape for business leaders, governments, and investors has been thrown into disarray as President Donald Trump recently announced a temporary halt to the high "reciprocal" tariffs that had previously been described as permanent fixtures. This decision, made public just last week, has not only shocked financial markets but has also generated significant upheaval on Wall Street, altering both short-term and long-term economic forecasts.

To unpack the implications of this sudden announcement, lets explore four key takeaways that range from the most certain to the somewhat obscure.

Firstly, it is essential to note that Trumps 90-day tariff suspension applies to nearly all countries, with the notable exception of China. The White House has indicated that China will continue to face an incremental tariff rate of 145 percent. In response, China has implemented its own retaliatory measures, which include additional surcharges and restrictions on U.S. imports. Conversely, the European Union has opted to postpone its retaliatory actions, choosing instead to await further developments, particularly regarding any additional pauses or changes in U.S. policy. Like other nations, the EU is keenly interested in understanding Trumps stance on concessions specific to individual companies.

The second takeaway revolves around the motivations behind this unexpected pause. A consistent theme in recent comments from high-ranking administration officials has been the influence of the bond market. It appears that the administration recognized the critical state of the U.S. Treasuries market, which was perilously close to a threshold that could trigger severe volatility and potentially hamper market functionality. Historical precedents from 2008 and 2020 illustrate the catastrophic effects of market disruptions, which rippled through both domestic and global economies and necessitated prompt interventions from governments and central banks.

This tariff pause was likely influenced by stark warnings from prominent financial figures, including JPMorgan Chase CEO Jamie Dimon, and an overwhelming influx of urgent communications directed to the administration, Congress, and the Federal Reserve. Following this, the administration attempted to reshape the narrative surrounding the pause, claiming it had always been part of a larger strategy, purportedly triggered by outreach from over 70 countries eager to negotiate reductions in both tariff and non-tariff barriers against the United States.

During a televised cabinet meeting last Thursday, President Trump reinforced the notion that the U.S. economy is navigating through a "bumpy journey," where transition costs and transition problems are part and parcel of the process. He emphasized that while volatility is a characteristic of his approach to negotiationthe so-called "Art of the Deal"its crucial for American households and businesses to remain focused on the ultimately rewarding destination that lies ahead.

The third point worth considering involves the potential obstacles on this tumultuous journey. There are significant execution risks associated with the immediate effects of stagflation as well as the interplay between deregulation efforts and the initiative dubbed the Department of Government Efficiency. Additionally, there are risks linked to managing substantial market dislocations and persuading other nations to make meaningful concessions with the goal of decisively mitigating the threat of ongoing trade wars and investment sanctions.

As evidenced by recent fluctuations in gold prices and other economic indicators, many countries appear to be accelerating their efforts to diversify away from the United States, which is increasingly perceived as diminishing its status as a safe haven within the global economic and financial architecture.

There are also inherent operational risks in negotiating with a multitude of countries simultaneously, particularly when factoring in the need for differentiated approaches and company-specific concessions. This complex dynamic resembles a spaghetti bowl of negotiations, which hinges on the administration's ability to reconcile its internal divisions regarding the primary objective of the trade war. Is the aim to foster fairer trade in a world with low or zero tariffs, or is it to generate substantial revenues and permanently bring production back to U.S. shores? Disagreements among key stakeholders within the administration have become more pronounced over the past couple of weeks.

On one side of the debate is the belief that these developments could lead to a broader economic restructuring akin to the Reagan/Thatcher era, positioning the U.S. to compete on a level playing field while empowering a more competitive private sector and slimmed-down, efficient government. Conversely, there is a fear that the U.S. might instead drift into a period reminiscent of Jimmy Carters stagflation, exacerbated by the existing tensions with China.

In conclusion, the volatility witnessed over the past fortnight has made it abundantly clear that the U.S. is embarking on a challenging and uncertain pathone that will put immense pressure on its financial system and test its global standing. This landscape will ultimately shape Americas capacity to counter China's efforts to position itself as the preferable partner in the short and long term.