US President Donald Trump announced a dramatic shift in his trade strategy on Wednesday, declaring a 90-day pause on reciprocal tariffs for most countries, while slapping even higher tariffs on China, escalating the ongoing trade war between the two largest global economies.
Trump revealed the decision on his Truth Social platform, stating that he had authorized a 90-day pause on increased tariffs, following negotiations with over 75 countries that had refrained from retaliating against the US. However, he made it clear that tariffs would still apply to China, raising them significantly to 125%.
The move comes after days of global market instability, with Wall Street responding positively to Trump’s announcement. “I have authorized a 90-day PAUSE on higher tariffs,” Trump wrote, explaining that most countries had engaged in talks and had not retaliated against the US.
However, Trump remained firm in his stance against China, accusing it of continuing to “rip off” the US. “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 added.
The US had previously increased tariffs on Chinese goods to 104%, prompting China to retaliate with its own tariffs, raising them to 84%. Trump maintained that the US would continue to push back against China’s trade practices.
The European Union (EU) also responded with countermeasures, targeting over 20 billion euros’ worth of US goods, including soybeans, motorcycles, and beauty products, in retaliation for US duties on steel and aluminum. Despite this, the EU refrained from retaliating against the new 20% tariffs on US goods that came into effect on Wednesday.
Trump had previously announced a blanket 10% tariff on all countries starting on Saturday, with additional rates for nations with large trade surpluses with the US, including China and the EU. Amid market volatility, Trump urged Americans to “BE COOL!” and reassured them that “Everything is going to work out well.”
Trump’s announcement was met with a positive market reaction, with the S&P 500 jumping 6.0% following the tariff pause, reversing losses from earlier in the week. This marked a significant recovery after a tumultuous period for global markets.
Trump has long claimed that his trade policies, especially those targeting China, are designed to revive America’s manufacturing sector by encouraging companies to relocate production to the US. He has consistently criticized China for its overproduction and accused it of dumping cheap goods on the global market, which he believes harms other economies.
Despite Trump’s efforts to seek deals with other nations, China remained defiant. The Chinese finance ministry criticized the US tariff escalation, stating that it was compounding previous errors. Meanwhile, US Treasury Secretary Scott Bessent warned that aligning with Beijing could have detrimental economic consequences for other countries.
As tensions continue to rise, China also issued a travel advisory urging tourists to “fully assess the risks” before visiting the United States. Meanwhile, US Defense Secretary Pete Hegseth raised concerns over Chinese “threats” as he visited Panama, a country at the center of the ongoing trade dispute between the two powers.
