In a dramatic shift that sent shockwaves through global markets, former President Donald Trump on Wednesday unveiled a 90-day pause on retaliatory tariffs for over 75 countries currently seeking to negotiate new trade agreements with the United States. At the same time, Trump sharply escalated trade tensions with China, announcing an immediate hike in tariffs on Chinese goods to 125 percent.
The announcement, made via Trump’s Truth Social platform, comes just days after the former president introduced a sweeping global tariff policy that rattled financial markets and drew sharp warnings from Wall Street heavyweights. Trump now says the 90-day pause will give countries time to strike new deals with the U.S.—but emphasized that China, which he labeled the “worst offender,” would face increased penalties.
Trump’s Trade Pivot
“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,” Trump wrote.
Conversely, for the more than 75 nations that have shown what Trump called a “willingness to negotiate,” he has authorized a temporary reduction in tariffs to a flat 10 percent baseline. This pause, he said, would last 90 days and apply to countries that have not retaliated against the U.S.
The move is a sharp reversal from the global tariff regime Trump introduced last week, which imposed a minimum 10 percent tariff on most imports and significantly higher rates on countries with large trade deficits with the U.S.
Markets Rally on Pause Announcement
The response from Wall Street was immediate—and euphoric. All three major U.S. stock indexes surged more than 7 percent, with the Nasdaq soaring over 10 percent in its best day in over five years. The Dow Jones and S&P 500 both posted their largest single-day gains since 2020.
Tesla shares jumped 14 percent, leading a rally in tech and industrial stocks battered by the initial tariff shock. Market analysts pointed to a collective sigh of relief that Trump was open to negotiations, even as trade tensions with China deepened.
Goldman Sachs, which had issued a recession warning earlier this week, reversed its forecast following Trump’s announcement.
Inside the Decision
Trump later acknowledged that the pause was partly in response to mounting economic panic.
“I thought that people were jumping a little bit out of line. They were getting yippee, you know, they were getting a little bit yippee. A little bit afraid,” Trump said when asked about the shift.
Trump’s tariff policy, which ties retaliatory rates to America’s trade deficits with individual nations, had drawn fierce criticism from economists who argue that trade deficits are not inherently harmful. But Trump has consistently maintained that deficits mean the U.S. is being “ripped off.”
China Tariffs Escalate Further
Trump’s tariff hike on China comes after Beijing raised its own retaliatory tariffs to 84 percent in response to Trump’s previous increase to 104 percent. The back-and-forth has triggered fears of a full-blown trade war between the world’s two largest economies.
China, which Trump previously targeted with a series of escalating tariffs over fentanyl exports and trade practices, has vowed to keep fighting if the U.S. maintains its aggressive stance.
Commerce Secretary Howard Lutnick praised Trump’s bold action, saying the world is rallying to his leadership while China remains defiant.
“Scott Bessent and I sat with the President while he wrote one of the most extraordinary Truth posts of his Presidency,” Lutnick said. “The world is ready to work with President Trump to fix global trade, and China has chosen the opposite direction.”
Tariff Policy Details
China: Tariffs now at 125%, up from 104%
Negotiating Countries (75+ nations): 10% baseline rate during 90-day window
Canada & Mexico: Remain at 25%, except where exempt under USMCA
Sector-Specific Tariffs: Including auto tariffs, remain in place
Universal 10% Tariff: Still applies as a base rate
Despite Trump's openness to negotiation, the administration confirmed that sector-specific levies, like the 25 percent tariff on auto imports, will remain unchanged.
Mixed Signals from the White House
While Trump’s announcement marks a possible softening in tone, the broader administration has continued to send conflicting signals. Trade advisor Peter Navarro has insisted that tariffs are not merely a negotiating tactic, suggesting they will remain in place long-term regardless of economic blowback.
This stance has led to clashes inside Trump’s own camp, with major donors and allies like Elon Musk publicly sparring with Navarro over the policy’s impact on business. Musk’s electric vehicle company, Tesla, is heavily dependent on global supply chains and vulnerable to high tariffs.
Global Response
The European Union has already responded to Trump’s tariff policy with retaliatory measures set to begin on April 15. The bloc had previously offered a mutual reduction of industrial tariffs to zero—a deal Trump rejected over concerns it wouldn’t solve the trade imbalance.
Meanwhile, other allies such as Israel and Italy have signaled eagerness to strike bilateral trade deals, with each negotiation expected to be tailored, or “bespoke,” as Treasury Secretary Scott Bessent described.
“The President will be personally involved in these talks,” Bessent noted. “We’re open for business—on our terms.”
Bottom Line: Trump’s tariff pause may have calmed markets in the short term, but with China facing record-high duties and the EU retaliating, global trade remains on edge. The next 90 days will be critical in determining whether Trump’s strategy leads to new deals—or deepens the economic uncertainty.
