Donald Trump announces 125% China tariff, 90-day pause for others

Facing a global market meltdown and a strong retaliation from China, US President Donald Trump on Wednesday abruptly backed down on his tariffs on most nations for 90 days, but raised his tax rate on Chinese imports to 125%.

US President Donald Trump delivers remarks on tariffs in the Rose Garden at the White House in Washington, on April 2. (REUTERS)

In a post on Truth Social, his own social platform, Trump said he had “authorized a 90-day pause, and a substantially lowered reciprocal tariff during this period, of 10%, also effective immediately.”

Treasury secretary Scott Bessent told reporters that Trump was pausing his so-called ‘reciprocal’ tariffs on most of the country’s biggest trading partners, but maintaining his 10% tariff on nearly all global imports.

He said the pause would apply to 75 countries that had opened negotiations with the US, without elaborating which nations these were.

Moments after Trump’s post, US stocks surged. The S&P 500 was up 7.8% in afternoon trading, after being in the red as Wall Street braced for Trump’s response following China’s decision to hit back at American tariffs by raising duties on US imports to 84%.

While Bessent said the turn of events was “Trump’s intention all along”, the President himself wrote: “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.”

Up until the moment Trump made the announcement on Wednesday, the global economy appeared to be in open rebellion against the tariffs as they took effect Wednesday.

Business executives were warning of a potential recession caused by his policies, some of the top US trading partners — including the European Union — retaliated with their own import taxes and the stock market was quivering after days of decline.

Trump, in his post, indicated the reprieve would apply to countries that had not retaliated.

Bessent did not respond to reporters’ questions on whether the reprieve would cover the EU, which announced its retaliation hours before Trump paused the levies.

One country that is likely to win a reprieve, though not named immediately, was India. India and the US have been engaged since February to work out a bilateral trade deal after Prime Minister Modi visited Washington. India is also not among the countries that have retaliated with any new levies against the US since April 9 when reciprocal American levies came into force.

Experts said a full-blown trade war limited to the US and China will nonetheless have a major impact on global economy. “The escalating trade tensions between the United States and China pose a significant risk of a sharp contraction in bilateral trade. Our preliminary projections suggest that merchandise trade between these two economies could decrease by as much as 80%,” Ngozi Okonjo-Iweala, director-general of the WTO, said in a statement.

“This tit-for-tat approach between the world’s two largest economies, which together account for roughly 3% of global trade, carries wider implications that could severely damage the global economic outlook. Our assessments, informed by the latest developments, highlight the substantial risks associated with further escalation,” the WTO chief added.

Earlier on Wednesday, China and the European Union announced new trade barriers on US in response to the steep duties imposed by Trump.

China announced a tariff hike on US imports to 84% from 34%, shortly after Trump’s punitive 104% tariffs on Chinese imports kicked in on Wednesday.

China warned it had the “determination and means” to continue the fight if Trump kept hitting Chinese goods.

Along with the countertariffs, Beijing also imposed restrictions on 18 US companies, mostly in defense-related industries, adding to the 60 or so American firms already punished over Trump’s tariffs.

The EU said it would impose 25% tariffs on a range of US imports in a first round of countermeasures.

JPMorgan Chase CEO Jamie Dimon, a prominent voice on economic matters, said Trump’s tariffs would probably lead to a recession and defaults by borrowers.

Global markets also took a pummelling through the day, with the damage spreading beyond stock markets that have seen trillions of dollars in equity evaporate over the past week. Oil prices plunged to four-year lows, while investors dumped US Treasury bonds and the dollar, which are typically seen as safe-haven assets. The damage rolled into corporate funding markets, raising the cost of borrowing for even lower-risk companies.

Trump has shrugged off the market rout and offered investors mixed signals about whether the tariffs will remain in the long term, describing them as “permanent” but also boasting that they are pressuring other leaders to ask for negotiations.

“BE COOL! Everything is going to work out well. The USA will be bigger and better than ever before!” he wrote on social media, adding that it was a “good time to buy”.

Trump has already spoken with leaders of Japan and South Korea, and a delegation from Vietnam is due to meet with U.S. officials on Wednesday.

“These countries are calling us up, kissing my ass,” he said on Tuesday.