Trump announces 90-day pause on some tariffs, ups China levy again

President Donald Trump on Wednesday announced a 90-day pause on reciprocal tariffs for every country except China, which he singled out for an additional trade levy.

While reciprocal tariffs will pause, the 10% blanket levy that went into effect Wednesday will remain in place.

Trump made the announcement in a Truth Social posting.

“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. “At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable.

“Conversely, and based on the fact that more than 75 Countries have called Representatives of the United States, including the Departments of Commerce, Treasury, and the USTR, to negotiate a solution to the subjects being discussed relative to Trade, Trade Barriers, Tariffs, Currency Manipulation, and Non Monetary Tariffs, and that these Countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately.”

U.S. stock indexes soared Wednesday afternoon following Trump’s tariff pause, reversing sharp declines over the past week.

At the end of the regular trading day, the Nasdaq Composite was up 12% in its best day in over two decades. The S&P 500 added 9.5% in its biggest gain since 2008, while the Dow Jones Industrial Average moved ahead 7.9%, its biggest day since 2020, per a report from the Wall Street Journal. The 2,963 point rally in the blue-chip index was its largest point-gain on record, according to Dow Jones Market Data.

Responding to questions from reporters at the White House following the president’s announcement, U.S. Treasury Secretary Scott Bessent suggested the pause was part of the president’s strategy all along.

“This was driven by the president’s strategy,” Bessent said. “He and I had a long talk on Sunday, and this was his strategy all along.

“You might even say he goaded China into a bad position. They responded. They have shown themselves to the world to be the bad actor.”

While the immediate market response on Wednesday was overwhelmingly positive, some economists warned that the trade policy shift wouldn’t erase investor uncertainty.

“Markets had been looking for a reason to rally for a few days. Markets can only sustain extreme conditions for so long before exhaustion sets in, rather like a toddler and a tantrum,” Carol Schleif, chief market strategist at BMO Private Wealth in Minneapolis, told Reuters.

“The 90-day suspension does allow nice breathing room to allow negotiation to settle in and market valuations have clearly been reset. Yet the uncertainty for companies remains.”

Fielding questions from reporters Wednesday afternoon at the White House, Trump said well over 75 countries are interested in negotiating new tariff deals with the U.S. and the president indicated he would not likely assess any further tariff increases on China.

“We calculated it very carefully,” Trump said.

Stock market reacts to the tariff pause

Earlier on Wednesday and just hours after new U.S. tariffs went into effect, including additional levies on Chinese goods raising the country’s total assessment to over 100%, China followed through on a promised response, raising its tariffs on U.S. imports to 84% in an escalating global trade war.

Starting April 10, tariffs on U.S. goods entering China will rise to 84% from the current 34% rate, according to a translation of the Chinese Office of the Tariff Commission of the State Council announcement, reported by CNBC.

New U.S. tariffs announced earlier this month that went into effect just after midnight on Wednesday include a blanket 10% import fee on all countries and a raft of so-called reciprocal tariffs that were calculated by taking the trade deficit for the U.S. in goods with a particular country, dividing that by the total goods imported from that country and then dividing that figure by two. The math behind the new levies led to sizable increases for many U.S. trading partners, including 34% on China, 20% on the European Union, 46% on Vietnam and 32% on Taiwan.

Trump slapped an additional 50% hike on China following the country’s response to the April 2 tariff announcement. The additional U.S. levy raised the total level for import taxes on Chinese goods to 104%.

While U.S. and global investment markets have experienced sharp declines in the days following the April 2 U.S. tariffs decree, Trump attempted to calm investor fears in postings to Truth Social Wednesday morning.

“BE COOL! Everything is going to work out well,” Trump wrote. “The USA will be bigger and better than ever before!”

And, “THIS IS A GREAT TIME TO BUY!!! DJT.”

U.S. markets were up slightly at midday on Wednesday but have lost trillions since the tariff unveiling last week. Global markets have also been shedding value as investors respond negatively to the tariff tumult and widespread uncertainty.

EU approves retaliatory trade measures

The European Union also hit back on Wednesday as member countries approved a new set of import fees on U.S. goods.

“The EU considers U.S. tariffs unjustified and damaging, causing economic harm to both sides, as well as the global economy. The EU has stated its clear preference to find negotiated outcomes with the US, which would be balanced and mutually beneficial,” the European Commission said in a statement.

The EU Commission also noted “countermeasures can be suspended at any time, should the U.S. agree to a fair and balanced negotiated outcome.”

The tariffs will be levied at 25%, Euro News reported Wednesday, and will apply to a list of U.S. goods that includes orange juice, poultry, almonds, steel and aluminum, soybeans, tobacco and yachts, per a report from The Hill. The new trade fees go into effect on April 15.

The official list of goods that will be subject to the tariffs was not immediately made public by the EU on Wednesday.

Business leaders warn of wider tariff impacts

In his annual letter to investors published on Monday, JPMorgan Chase CEO Jamie Dimon warned the swirl of uncertainty around the new tariff policies could lead to impacts beyond the levies themselves and said the sooner trade issues could be resolved, the better, “because some of the negative effects increase cumulatively over time and would be hard to reverse.”

“Whatever you think of the legitimate reasons for the newly announced tariffs — and, of course, there are some — or the long-term effect, good or bad, there are likely to be important short-term effects," Dimon wrote.

“As for the short-term, we are likely to see inflationary outcomes, not only on imported goods but on domestic prices, as input costs rise and demand increases on domestic products. How this plays out on different products will partially depend on their substitutability and price elasticity. Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth.”