In a significant announcement, President Donald Trump declared a comprehensive three-month pause on all “reciprocal” tariffs that had taken effect at midnight, with the notable exception of those imposed on China. This move marked a surprising shift from Trump’s previous stance of maintaining extremely high tariffs, which he had promoted as a staple of his economic policy.
Despite the overarching pause, the tariffs targeting China—a nation that is significant both economically and geopolitically—would remain robust. In fact, Trump revealed that these tariffs would increase from 104% to a striking 125%. This decision came after China announced its own retaliatory tariffs against various U.S. products earlier that Wednesday, escalating tensions between the two nations.
Trump communicated his intentions explicitly in a social media post, stating, “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.” He conveyed his hope that China would acknowledge that their previous practices of “ripping off the U.S.A. and other Countries” are neither acceptable nor sustainable.
The United States stock market responded positively to the announcement, reflecting a collective sigh of relief from Wall Street that Trump was stepping back from other aggressive trade measures. Although the 10% universal tariff on all imports entering the United States remained in place, a sense of optimism permeated the markets, as stocks surged sharply on the news.
In a post on Truth Social, Trump stated he had “authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately.” Following this announcement, Treasury Secretary Scott Bessent highlighted the pause as a calculated move inherent to Trump’s strategy. He praised Trump’s decision to remain steadfast until this pivotal moment.
CNN reported that Bessent had traveled to Mar-a-Lago over the weekend to persuade Trump to consider an endgame focused on reaching renewed trade agreements with various countries. Conversely, US Trade Representative Jamieson Greer testified in a House hearing that he had no prior knowledge of the pause until it was publicly announced. When pressed further, Greer acknowledged that while he was aware a policy change was a possibility that morning, he did not know definitively that it would be enacted.
Bessent emphasized that Trump would take a hands-on approach in future discussions, aiming to leverage the negotiations to the U.S.’s advantage. He claimed, “No one creates leverage for himself like President Trump,” indicating a belief in his negotiating prowess.
The strategic messaging intended for other countries was clear: do not retaliate, and you will be rewarded. Bessent underscored, through these actions, that the administration seeks to negotiate in good faith, signaling an eagerness to foster more cooperative international trade dynamics.
The announcement expanded into broader market reactions, with indices experiencing robust gains. The Dow surged by over 2,300 points, roughly translating to a 6.2% increase; the S&P 500 rose by 7.4%, and the Nasdaq climbed nearly 10%. Prior to the announcement, market uncertainties had loomed large due to the potential for escalated tariffs.
Trump’s message to the public was direct, urging, “THIS IS A GREAT TIME TO BUY!!!” He concluded with the initials “DJT,” likely referencing Trump Media & Technology Group Corporation, whose stock had fallen nearly 13% prior to the announcement. However, shares jumped by over 20% on Wednesday alone, highlighting the volatile nature of market sentiment surrounding Trump’s policies.
Bessent was somewhat vague about the situation post-pause but assured that discussions with other nations would continue during the interim. For instance, he mentioned US officials would be engaging with representatives from Vietnam that Wednesday.
The escalation of tariffs on China occurred after Beijing unveiled a series of new retaliatory tariffs of 84% on various US goods, set to take effect shortly. The Trump administration had long been critical of China’s trade practices, leading to these ongoing tensions.
In response to the administration’s strategy, the State Council Tariff Commission in China stated that the U.S.’s decision to raise tariffs constituted a severe infringement on China’s rights, underlining the fraught diplomatic landscape between the two nations.
Alongside these developments, economists were quick to raise recession forecasts in light of Trump’s implementation of reciprocal tariffs that could be as high as 50%. While investors welcomed the temporary pause, market analysts indicated serious concerns about the U.S. economy, suggesting that the reprieve might not be sufficient to prevent an impending recession.
Goldman Sachs echoed this sentiment, maintaining that the likelihood of a recession within the next year had not diminished, reflecting an overall ominous economic climate.
Representatives from the foreign trade sector acknowledged the temporary pause as a positive move yet warned that the overarching framework of tariffs still left many uncertainties unaddressed. Consequently, while the pause on tariffs may offer a short-term reprieve for investors,