U.S. President Donald Trump has announced a 90-day pause on newly implemented reciprocal tariffs affecting dozens of trade partners in a dramatic policy reversal, just hours after they took effect.
The pause comes alongside a significant escalation in duties on Chinese imports, which were hiked to 125% effective immediately.
The decision marks a major shift in the administration’s trade strategy after mounting pressure from global markets, business leaders, and investors concerned about recession risks.
90-day pause, lower tariffs for most nations
Trump took to social media Wednesday to confirm the move, stating:
“I have authorized a 90-day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately.”
- The higher tariffs had targeted 56 countries and the European Union with duties exceeding 30%, sparking market volatility. Under the new arrangement, these countries will now face a baseline tariff of 10%, with the exception of China.
- According to a White House official, over 75 countries have reached out to Washington seeking to negotiate revised trade agreements. Trump emphasized that none of them have retaliated, “at my strong suggestion.”
Markets surge, recession fears ease
U.S. financial markets responded swiftly to Trump’s announcement. The S&P 500 Index jumped over 8%, its largest single-day gain since 2020, while the tech-heavy Nasdaq 100 recorded its biggest surge since 2008.
Goldman Sachs analysts withdrew their forecast for a U.S. recession, citing renewed investor confidence.
Bond markets pared losses, though yields remained up across maturities. Commodity and energy prices also surged, with notable gains in copper, Arabica coffee, and natural gas. Bitcoin posted a sharp rally, while soybean futures lagged, signaling continued uncertainty over U.S.-China trade.
China targeted with steep tariff hike
While easing tariffs on most U.S. trade partners, the Trump administration sharply escalated its trade conflict with China.
Citing a lack of respect for global markets, Trump announced a 125% duty on Chinese imports, following Beijing’s own plan to impose 84% tariffs on American goods starting Thursday.
“Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately,” Trump wrote online.
The decision reflects the administration’s continued hardline stance toward Beijing over trade practices and ongoing tensions around technology, intellectual property, and supply chains.
Trump’s strategy
Treasury Secretary Scott Bessent described the tariff pause as part of a broader strategy to gain negotiating power.
“This was his strategy all along. He created maximum negotiating leverage for himself,” Bessent told reporters.
He added that talks would soon commence with several Asian economies, including Vietnam, Japan, India, and South Korea.
Billionaire investor Bill Ackman, a vocal supporter of the president’s economic policies, had earlier warned that the sweeping tariff hikes could trigger a “self-induced, economic nuclear winter.”
He publicly urged Trump to implement a temporary suspension.
- Meanwhile, Democratic lawmakers have raised concerns about the timing of Trump’s announcement and its impact on financial markets.
- Representative Steven Horsford accused the president of “market manipulation,” suggesting the move benefited wealthy investors.
- U.S. Trade Representative Jamieson Greer, caught off guard during a House hearing, denied any manipulation and insisted the decision was policy-driven.
Backstory
The United States President, Donald Trump, recently imposed a global tariff on all U.S. trading partners, in what he dubbed “Liberation Day.”
The decision sent global markets into a tailspin, as foreign investors sold off assets over fears of heightened uncertainty and potential reciprocal tariffs. In response, China retaliated with a 34% tariff on all U.S. imports into the country.
The United States also imposed a 14% tariff against Nigeria, claiming the country operates a trade surplus.
Based on Trump’s stated policy, this should have warranted a 28% tariff, but Nigeria received what Trump called a “concessionary” 14% rate.
