US President Donald Trump unexpectedly retreated on Wednesday in his international trade conflict, implementing a 90-day pause for most nations—but imposing additional tariffs on China, escalating the confrontation between the two largest global economies.
After days of turmoil in global markets, Wall Street experienced a strong rebound following Trump’s declaration.
The only remaining measure is a flat rate of 10 percent tariffs on all countries, which began on Saturday. This represents a remarkable shift from the more severe tariffs that had affected many of the US’s closest allies.
Trump accused China of still “ripping off” the United States.
“Due to the lack of respect that China has demonstrated towards the World’s Markets, I am hereby increasing the tariff imposed by the United States of America on China to 125 percent, effective immediately,” Trump said.
Just hours before, he had escalated duties on Chinese imports to 104 percent. In response, China raised tariffs on US goods to 84 percent.
The European Union had previously initiated its countermeasures, announcing actions against certain US products starting Tuesday as retaliation for American tariffs on global steel and aluminum exports.
The 27-member bloc, which Trump has claimed was established to “screw” the United States, will target more than 20 billion euros’ worth of US goods, including soybeans, motorcycles, and beauty products. However, the EU notably refrained from retaliating against the 20 percent US tariffs that took effect just after midnight on Wednesday.
Last week, Trump proclaimed “Liberation Day,” announcing a 10 percent baseline tariff on all countries that commenced on Saturday, along with additional rates for economies such as China and the EU with significant trade surpluses with the United States that began on Wednesday.
With unsettled markets for the past week, Trump encouraged Americans to “BE COOL!” and said, “Everything is going to work out well.”
Wall Street stocks soared on Wednesday following Trump’s pause announcement. Shortly after Trump announced, the S&P 500 jumped 6.0 percent to 5,281.44, breaking a harsh streak of losses from the past week.
European and Asian stock markets had previously declined, along with oil prices and the dollar as the tensions escalated.
US bond yields also increased amid a significant sell-off, indicating a serious economic concern since sovereign government debt is typically perceived as a safe haven for investors during turbulent times.
Trump asserts that his strategy will revitalize America’s dwindling manufacturing sector by compelling companies to return to the United States.
The billionaire former real estate mogul has lashed out at China, accusing it of overproduction and “dumping” cheap goods on other markets.
On Wednesday, China advised its tourists to “fully assess the risks” before visiting the United States.
US Defence Secretary Pete Hegseth subsequently cautioned against Chinese “threats” during his visit to Panama, which is at the heart of a dispute between Beijing and Washington.
