US President Donald Trump on Wednesday (local time) announced a 90-day pause in his sweeping tariffs on the majority of the nations, with the exception of China. Trump's decision came after he raised the duties on Beijing to 125 per cent following China's retaliatory tariffs of 84 per cent on all US imports. Amidst the global market meltdown, Trump posted on Truth Social that since "more than 75 countries” had reached out to the US government for trade talks, he "authorised a 90-day pause", adding that the Reciprocal Tariff will be substantially lowered.
Trump comes down heavily on China
In a statement, the White House’s press secretary, Karoline Leavitt, emphasises that the US President had raised tariffs against China because “when you punch at the United States of America, President Trump is going to punch back harder”.
In a post on Truth Social, Trump said, "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. At some point, hopefully in the near future, China will realise that the days of ripping off the US and other countries are no longer sustainable or acceptable."
Probable reason behind reversal in tariff policy
According to a CNN report, a growing alarm inside the Treasury Department regarding the upheavals in the bond market following Trump's sweeping tariffs on the US's trading partners became one of the prime reasons why Trump authorised a 90-day pause. The report also claims that US Treasury Secretary Scott Bessent flagged the concerns to the US President.
US stock market gains
After Trump's latest decision, Wall Street stocks gained considerably, lifting the equity market, which was undergoing a downward spiral with Trump on a tariff imposition spree.
Speaking to reporters, Trump later said that he pulled back on many global tariffs but kept duties intact on China since people were “yippy” and “afraid”. Trump also added that he had been watching the bond market and that people were “getting a little queasy”.
Why was China singled out?
Donald Trump's decision to abruptly back down appears to be an attempt to portray the trade war between the US and the world as a US versus China showdown.
Notably, China has prominently responded to Trump's tariffs, escalating the already intensified trade war between the world's two largest economies. On Wednesday, China, in its latest announcement, slapped an 84 per cent tariff on all US imports, prompting Trump to take duties on Beijing to 125 per cent.
Following this, as the US sets the China example, the White House doubled down on its pressure as it sent a warning to nations, saying, "Do not retaliate and you will be rewarded."