U.S. President Donald Trump announced a 90-day pause for most tariffs on Wednesday, while escalating economic pressure on China, deepening the trade standoff between the world’s two largest economies, which unexpectedly alleviated his global trade stance.
After the subsequent market turmoil, Wall Street responded to the announcement. Stocks rebounded sharply, with the S&P 500 climbing 6.0% to 5,281.44, ending a week-long winning streak.
“I have authorized a 90-day pause to higher tariffs,” Trump wrote on his Truth Social Platform. He explained that more than 75 countries reached out to negotiate and chose not to retaliate, prompting his decision.
However, fair tariffs in all countries will remain in place starting Saturday. This marks a major shift in Trump’s previous hardline stance, which includes huge levies even near U.S. allies.
While easing global pressure, Trump has intensified his remarks about Beijing. He declared: “Based on China’s respect for the world market, I hereby raise the tariffs charged by the United States to China, which will take effect immediately.”
Earlier in the day, the White House raised tariffs on Chinese goods to 104%, prompting Beijing to respond immediately. China retaliated by raising tariffs on U.S. imports to 84%.
“At some point, hopefully in the near future, China will realize that days of depriving the United States and other countries are no longer sustainable or acceptable,” Trump added.
Meanwhile, the EU launched its own retaliatory measures against more than 20 billion euros of U.S. goods (including soybeans, motorcycles and beauty products) on Tuesday. The move is to deal with U.S. tariffs on global steel and aluminum exports. However, the EU has clearly blocked retaliation against the 20% U.S. tariffs that took effect on Wednesday midnight.
Trump had previously announced a new baseline 10% tariff in his so-called “liberation day”, setting higher interest rates for countries with trade surplus with the United States, including China and the European Union.
The global market responded quickly. Although U.S. stocks rallied after Trump stopped announcing, European and Asian markets and oil and other commodities fell due to concerns about the escalating trade war.
U.S. bond yields have also soared due to the sell-off of government debt, a safe haven among investors in times of uncertainty, a growing concern about global economic stability.
