TLDR
- President Trump announced a 90-day pause on global tariffs while raising tariffs on Chinese imports to 125%
- The decision followed severe market volatility that erased trillions from stock markets
- Over 75 countries contacted US officials to discuss trade matters following initial tariff announcements
- Markets rallied with S&P 500 rising 9.5% and Bitcoin jumping 8% to $82,000
- Trump cited China’s “lack of respect” for world markets as reason for targeted increase
In a policy shift, US President Donald Trump announced a 90-day pause on recently imposed global tariffs while simultaneously raising duties on Chinese imports to 125%.
The decision on Wednesday came less than 24 hours after steep new tariffs had kicked in for most trading partners, bringing relief to financial markets that had experienced unprecedented volatility.
The sudden reversal followed what analysts described as the most intense episode of market turbulence since the early days of the COVID-19 pandemic. The upheaval had erased nearly $6 trillion from S&P 500 companies’ stock market value in just four days, a record decline for the benchmark going back to the 1950s.
Trump explained his decision to reporters, saying,
“I thought that people were jumping a little bit out of line, they were getting yippy, you know,” referring to the market jitters. Despite insisting for days that his policies would never change, he later added: “You have to be flexible.”
Markets Rally on Tariff Rollback
The announcement triggered an immediate market recovery. The S&P 500 closed 9.5% higher, while the tech-heavy Nasdaq gained 10%. Major tech stocks posted strong gains with Tesla surging 14%, Nvidia rising 12%, and Apple climbing 11%.
Bitcoin responded with an 8% jump to $82,000. Other cryptocurrencies and commodities also surged as investors quickly re-embraced risk assets.
BTC Price
The relief rally continued into Asian trading on Thursday with Japan’s Nikkei index surging 9%. European futures also pointed to big gains, though there were early signs the rally might be short-lived with US stock futures trading lower and oil prices falling.
Treasury Secretary Scott Bessent claimed the 90-day freeze had been planned all along to bring countries to the negotiating table. “This was his strategy all along,” Bessent told reporters. “And you might even say that he goaded China into a bad position.”
China in the Crosshairs
While pausing tariffs for most nations, Trump kept pressure on China by immediately hiking tariffs on Chinese imports to 125% from the 104% level that had just taken effect. The targeted increase followed China’s implementation of 84% tariffs on US imports earlier on Wednesday.
“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 on Truth Social.
Beijing showed no signs of backing down. “We don’t back down,” China’s foreign ministry spokesperson Mao Ning posted on X, sharing a video of a defiant speech by late Chinese leader Mao Zedong from 1953.
Chinese sellers on Amazon are now preparing to raise prices for US customers or exit that market entirely due to the tariff blow. Goldman Sachs revised down its forecast for China’s GDP growth to 4% in 2025, from previous projections of 4.5%, citing the tariffs’ negative effects.
Trump suggested a resolution with China on trade remains possible, stating, “China wants to make a deal. They just don’t know how quite to go about it.” However, US officials indicated they will prioritize talks with other countries.
The 90-day pause does not entirely eliminate Trump’s tariff program. A 10% blanket duty on almost all US imports will remain in effect, the White House said. The pause also does not apply to duties paid by Canada and Mexico, which remain subject to 25% fentanyl-related tariffs if they do not comply with trade agreement rules.
Over 75 countries have reportedly contacted various US departments including Commerce, Treasury, and the Office of the United States Trade Representative to discuss trade matters since Trump unveiled his initial tariff plan on April 2.
Commerce Secretary Howard Lutnick confirmed he was present when Trump drafted the announcement. “Scott Bessent and I sat with the President while he wrote one of the most extraordinary Truth posts of his Presidency,” Lutnick wrote on X. “The world is ready to work with President Trump to fix global trade, and China has chosen the opposite direction.”
The about-face is consistent with Trump’s pattern since returning to the White House in January. He has repeatedly threatened punitive measures on trading partners, only to revoke some at the last minute, leaving world leaders and business executives puzzled by the on-again, off-again approach.
Spanish Prime Minister Pedro Sanchez responded cautiously to the development, saying, “The measure announced by the US administration, pending the exact nuances of its implementation, seems to open the door to negotiation.”
Before Wednesday’s reversal, economists had warned that Trump’s original global tariff plan could trigger a severe global recession, with some investors even cautioning about a possible “economic nuclear winter.”
