President Donald Trump has announced a temporary suspension of the sweeping "reciprocal" tariffs that went into effect this week—except for China, which will now face even higher rates. The unexpected move comes amid mounting global economic tension and plunging investor confidence.
In a statement posted on his social media platform Wednesday, Trump declared that tariffs on Chinese imports would rise from 104% to a staggering 125%. He cited China’s retaliatory measures as justification, accusing Beijing of exploiting global markets. “Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff… effective immediately,” he wrote.
While China braces for increased economic pressure, other nations caught in the tariff crossfire will see a rollback. The majority of countries hit with reciprocal tariffs will revert to a 10% universal import rate. However, Mexico and Canada remain under 25% tariffs for most goods unless covered by the US-Mexico-Canada Agreement. Select sectors, including steel and automobiles, are still subject to elevated duties.
The stock market reacted swiftly and positively. The Dow surged nearly 3,000 points (up 7.87%), while the S&P 500 jumped 9.5%. The Nasdaq posted a remarkable 12.2% gain—its second-best day ever. The rally followed weeks of turbulence triggered by Trump’s initial tariff announcements.
Trump hinted at flexibility, telling reporters, “You have to have flexibility,” after noting that foreign leaders were starting to “get a little yippy yappy.” He also claimed the decision had come together earlier that morning in consultation with Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick.
White House officials later said the pause was part of a broader strategy aimed at encouraging countries to negotiate rather than retaliate. “Do not retaliate and you will be rewarded,” Bessent told reporters. He added that the President would be personally involved in trade discussions throughout the 90-day period.
Still, not everyone in the administration was on the same page. U.S. Trade Representative Jamieson Greer testified before Congress that he had not been informed of the decision prior to the public announcement.
The trade truce with most countries may calm markets temporarily, but economic experts warn it won’t erase the damage already done. Retaliatory tariffs from China—set to hit U.S. goods at rates up to 84%—are scheduled to take effect Thursday. China’s government strongly condemned the new U.S. policy, calling it “a mistake upon mistake” and a violation of global trade rules.
Meanwhile, economists remain cautious. Some analysts, like RSM’s Joe Brusuelas, still expect a recession despite the pause. “The economy is still likely to fall into recession given the level of simultaneous shocks it’s absorbed,” he said.
Though welcomed by many in the business community, the pause leaves significant uncertainty. Industry leaders noted that while Trump has walked back the harshest measures for now, his administration maintains a protectionist stance with threats of future tariffs on key sectors such as lumber, pharmaceuticals, and copper.
With negotiations expected to take place over the next three months, the world will be watching to see if Trump’s latest pivot is a temporary detour—or a new direction entirely in U.S. trade policy.
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