Washington: Facing a global market meltdown, President Donald Trump on Wednesday abruptly backed down on his tariffs on most nations for 90 days, but raised the tax rate on Chinese imports to 125 per cent.
It was seemingly an attempt to narrow what had been an unprecedented trade war between the US and most of the world to a showdown between the US and China.
The S&P 500 stock index jumped nearly 7 per cent after the announcement, but the precise details of Trump’s plans to ease tariffs on non-China trade partners were not immediately clear.
Trump posted on Truth Social that because “more than 75 Countries” had reached out to the US government for trade talks and have not retaliated in meaningful way “I have authorised a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10 per cent, also effective immediately.”
The 10 per cent tariff was the baseline rate for most nations that went into effect on Saturday. It’s meaningfully lower than the 20 per cent tariff that Trump had set for goods from the European Union, 24 per cent on imports from Japan and 25 per cent on products from South Korea.
Still, 10 per cent would represent an increase in the tariffs previously charged by the US government.
The announcement came after the global economy appeared to be in open rebellion against Trump’s tariffs as they took effect Wednesday, a signal that the US president was not immune from market pressures.
Business executives were warning of a potential recession caused by his policies, some of the top US trading partners are retaliating with their own import taxes and the stock market is quivering after days of decline. White House press secretary Karoline Leavitt said the walk back was part of some grand negotiating strategy by Trump.
“President Trump created maximum negotiating leverage for himself,” she said, adding that the news media “clearly failed to see what President Trump is doing here. You tried to say that the rest of the world would be moved closer to China, when in fact, we’ve seen the opposite effect the entire world is calling the United States of America, not China, because they need our markets.”
But market pressures had been building for weeks ahead of Trump’s move.
Particularly worrisome was that US government debt had lost some of its luster with investors, who usually treat Treasury notes as a safe haven when there’s economic turbulence.
Government bond prices had been falling, pushing up the interest rate on the 10-year US Treasury note to 4.45 per cent. That rate eased after Trump’s reversal.
Earlier in the day, China hit back at US President Donald Trump’s tariffs on Chinese exports with 84 per cent levies on its imports from America, intensifying the trade war between the top two economies of the world.
President Trump’s sweeping 104 per cent tariff on Chinese goods came into effect at midnight ET, escalating tensions further. In response, China not only raised its tariff on US goods but also formally filed a complaint with the World Trade Organization (WTO) and rolled out new restrictions on a dozen US companies, while adding six more to its “unreliable entity list.”
The hike in levies, up from 34 per cent, came hours after Trump’s explosive new tariffs on 60 countries, including 104 per cent on China, came into effect after midnight Wednesday US time.
Despite the economic standoff, Bessent noted that Trump and Chinese President Xi Jinping maintain a “very good personal relationship,” and said the US and China “can move together” if both sides realign — the US toward manufacturing, China toward consumption.
Trump used his Truth Social platform to pitch the US as the ideal destination for global business relocation. “ZERO TARIFFS, and almost immediate Electrical/Energy hook ups and approvals. No Environmental Delays. DON’T WAIT, DO IT NOW!” he wrote, urging companies to shift operations to the US.
China’s State Council Tariff Commission hit back, calling the US tariffs “a mistake upon mistake” and warning they would not back down.
“The US escalation of tariffs on China is severely infringing upon China’s legitimate rights and interests, and seriously damaging the multilateral trading system,” the commission said.
China will hike the additional tariffs on products imported from the U.S. to 84 per cent effective Thursday, state-run Xinhua news agency reported quoting the Customs Tariff Commission of the State Council’s announcement on Wednesday.
The US additional tariff measures seriously violate WTO rules, a spokesperson of the Commerce Ministry of China said, responding to the additional tariff announcement by the US on Chinese goods over and above the earlier reciprocal tariffs.
The imposition of additional 50 per cent tariffs is a grave mistake on top of an existing one and highlights the unilateral bullying nature of the US actions, the spokesperson said.
Meanwhile, European Union member states voted to approve retaliatory tariffs on $23 billion in goods in response to US President Donald Trump’s 25 per cent tariffs on imported steel and aluminum, as the largest US trading partner described them as “unjustified and damaging.”
The tariffs will go into effect in stages, with some on April 15 and others on May 15 and December 1. The EU executive commission didn’t immediately provide a list of the goods.
Additionally, China added six US firms to its unreliable entity list, the ministry said.
These companies, in disregard of strong opposition from China, have in recent years either participated in arms sales to Taiwan or engaged in so-called military technology cooperation with Taiwan, seriously undermining China’s national sovereignty, security and development interests, a spokesperson for the ministry said, Xinhua reported.
Separately, China has added 12 US companies to its export control list, the ministry said, adding, these companies have engaged in activities that may endanger China’s national security and interests. agencies