In a dramatic policy shift, President Donald Trump announced a 90-day suspension on the controversial reciprocal tariffs for countries that did not retaliate against the United States, sparking a major rally in global markets. However, China remains in the crosshairs, as Trump immediately raised tariffs on all Chinese imports from 104% to 125%, calling Beijing’s countermeasures “a grave mistake.”
“At some point, China will realize that the days of ripping off the USA, and other countries, is no longer sustainable,” Trump wrote on Truth Social.
Key Developments
- Tariff Pause for Allies: Trump authorized a 90-day pause on reciprocal tariffs for non-retaliating countries, with a temporary cap of 10% on affected goods.
- China Punished: Tariffs on Chinese imports were hiked to 125% after China imposed retaliatory duties of 84% on U.S. goods.
- Markets Rebound:
- Dow Jones surged +2,300 pts (+6.2%)
- S&P 500 jumped +7.4%
- Nasdaq soared +9.8%
- Truth Social parent company (DJT) rose +20%, after Trump posted “THIS IS A GREAT TIME TO BUY!!!”
Officials React
Treasury Secretary Scott Bessent said the move was “part of the strategy all along,” calling Trump’s willingness to pause “a show of strength.”
“Do not retaliate and you will be rewarded,” Bessent told reporters.
“President Trump is creating leverage and will personally lead the talks.”
Commerce Secretary Howard Lutnick confirmed he and Bessent were beside Trump as he authored the Truth Social post:
“We sat with the President while he wrote one of the most extraordinary Truth posts of his presidency,” Lutnick posted on X.
“The world is ready to work with President Trump. China has chosen the opposite direction.”
U.S. Trade Rep Jamieson Greer, however, revealed in congressional testimony that he was unaware of the pause until it had already been made public.
China Vows To Resist
In response to Trump’s 125% tariff hike, China’s State Council Tariff Commission blasted the move:
“A mistake upon mistake. The escalation severely infringes upon China’s legitimate rights and damages the rules-based multilateral trading system.”
Beijing reiterated it would “fight to the end” and signaled further retaliatory steps may be on the way.
What It Means
While the tariff pause was welcomed by global investors and U.S. trade allies, analysts warned it’s not a fix, just a timeout.
- Jake Colvin, President of the National Foreign Trade Council, said: “It’s a step in the right direction — but the baseline 10% tariff still hurts. Let’s not pretend this is over.”
- Joe Brusuelas, Chief Economist at RSM US, noted: “This just delays what still looks like a global recession. Too many shocks are already in motion.”
What’s Next?
- Talks underway: U.S. officials are meeting with Vietnam, the UK, Japan, and others this week to negotiate exemptions or new trade terms.
- No talks with China: Trump has made clear that Beijing must reverse its tariffs first, or face further escalation.
- Industry outlook: Tariffs on steel, aluminum, automobiles, and likely pharmaceuticals, lumber, and copper remain intact.
Recession Risk
- Goldman Sachs: 45% chance of U.S. recession in 2025
- JPMorgan: Recession remains base-case unless Trump softens broader tariff policy
Trump’s 90-day pause marks his first major shift in tone since launching the sweeping tariff regime last week. But by keeping pressure on China — and leaving the global 10% tariff in place — uncertainty remains the dominant theme for businesses, investors, and foreign governments.
“Maximum pressure. Maximum leverage. Maximum unpredictability.” — A senior official summarized Trump’s trade doctrine Wednesday night.
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