Months of escalating tariffs between China and the U.S. gave way to a truce earlier this week. "We are in agreement that neither side wants to decouple," Treasury Secretary Scott Bessent told reporters on Monday.

In that spirit, both sides announced a 90-day ceasefire, during which China will scale its 125% tariffs on U.S. goods down to 10% while the U.S. will scale back its levies on Chinese goods from 145% to 30%. 

That still leaves tariffs on Chinese goods at their highest rate ever. Nonetheless, U.S. equity markets rejoiced. The week opened with four straight days of gains for the three major indices–the Dow Jones, the S&P 500 and the Nasdaq Composite - and markets are largely back to where they began the year. 

Why?

It’s true. Before the agreement, economists placed the likelihood of a recession somewhere between imminent and already happening. But after a four day market rally and a sudden surge in shipping activity between the U.S. and China, things are looking up…ish. 

The possibility of a recession is back to a coin-flip. 

“This is a market that has shifted to cautious optimism,” said Joe Cusick, senior vice president and portfolio specialist at Calamos Investments.

But, he says, investors are still navigating what he calls a “wall of worry.”

On Thursday, Fed Chair Jerome Powell seemed to share this worry. He explained that “we may be entering a period of more frequent, and potentially more persistent, supply shocks — a difficult challenge for the economy and for central banks."

Even as tensions eased with China, tariffs have already disrupted supply chains. Americans may need to prepare themselves for bare shelves in the coming months and beyond.

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You can also expect that whatever is left on these shelves will cost more. 

On a Thursday earnings call with investors, Walmart CEO Doug McMillon said “given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure.”

““The higher tariffs,” he said, “will result in higher prices.” Attention Walmart shoppers. Your shit just got more expensive. 

Generally speaking, retailers are in a tough spot. McMillon, who is a vocal supporter of Trump and an occasional guest at Mar-a-Lago said that “the lack of clarity that exists in today’s dynamic operating environment makes the very near-term exceedingly difficult to forecast.”  

I know. I know. Cue the world’s smallest violin for Walmart.

But the point is, retailers have no idea what comes next, even in the midst of our trade detente with China. 

“What are the chances that we have 90 days of calm ahead of us?” economist Justin Wolfers  wondered in conversation with CNN on Monday. “Today we have good news, but what would really be good news is if someone just took the button away from him.” 

That seems unlikely though, particularly given Trump’s singular takeaway from the agreement with China.

"This trade deal is a win for the United States,” said the White House in an official statement, “demonstrating President Trump's unparalleled expertise in securing deals that benefit the American people."

Some economists see it differently. 

Pau Pujolàs is a professor of economics at McMaster University in Hamilton, Ontario. The Trump administration cited his work when calculating its reciprocal tariffs on Liberation Day. Here’s how he viewed the deal with China:

“If I throw a 50-kilogram rock on my right foot, and all of a sudden I change it for a 20-kilogram rock, yeah, I am better off. Unclear that any of it was necessary or desirable, however."

The markets have churned with uncertainty for months, and that seems unlikely to change now. But one thing is quite certain, even after the deal with China. Now is the moment when everyday Americans will begin to feel the churn in our wallets.