US President Donald Trump has dramatically altered his week-old tariff policy, announcing a 90-day pause on higher tariffs for most countries while simultaneously intensifying the trade war with China by raising tariffs to 125%.
Global Markets Rally After Trump’s Surprise 90-Day Tariff Pause
In a stunning reversal that sent global markets soaring, President Donald Trump announced a 90-day pause on higher tariffs for most countries just hours after the levies had taken effect on 9 April.
“I have authorised a 90-day PAUSE,” Trump wrote on his Truth Social network, explaining that over 75 countries had reached out to negotiate and had not retaliated against his initial tariffs.
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The pause applies to nations that Trump had previously labeled as “worst offenders” for what he considers unfair trade practices, including the European Union, Vietnam, and South Africa.
These countries were set to face tariffs ranging from 11% to over 100%.
However, the baseline 10% tariff on all imports that took effect on 5 April will remain in place during this pause period.
Wall Street responded with a massive rally, with the S&P 500 surging 9.5% to 5,456.90, breaking a brutal streak of losses over the past week.
Asian markets also rallied on 10 April, with Australia, Hong Kong, Taipei and Tokyo posting significant gains.
When questioned about this policy shift, Trump denied backtracking on tariffs, telling reporters: “You have to be flexible.”
He added that “people were jumping a little bit out of line, they were getting yippy, a little bit afraid,” using a sports term that describes a loss of nerve.
Trump also indicated that he had been monitoring the “very tricky” US bonds market, noting that “people were getting a little queasy” as US bond yields rose during the stocks sell-off – a major economic warning sign, as American sovereign debt is typically viewed as a safe investment during uncertain times.
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US Treasury Secretary Scott Bessent insisted the policy change was not influenced by global market falls, but Senate Democratic Leader Chuck Schumer characterized the decision as evidence that Trump was “reeling and retreating.”
US-China Trade War Intensifies with Retaliatory Tariff Exchange
While most countries received relief, Trump dramatically escalated the trade conflict with China, raising tariffs to 125% with immediate effect.
The intensification came after China announced it would increase its tariffs on US imports from 34% to 84%, effective from 12:01 PM on 10 April.
Beijing made this move in response to Trump’s earlier decision to raise US tariffs on Chinese goods to 104%.
“At some point, hopefully in the near future, China will realise that the days of ripping off the U.S.A., and other Countries, are no longer sustainable or acceptable,” Trump wrote on Truth Social.
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Speaking to reporters, Trump predicted that trade deals would eventually be made with all countries, including China, though he added that China’s leaders “don’t know quite how to go about it.”
Despite the harsh rhetoric, Trump also stated that he “can’t imagine” increasing Chinese tariffs beyond the current level.
China’s foreign ministry spokesman Lin Jian said that the US “continues to impose tariffs on China in an abusive manner” and opposed such “bullying practices.”
He emphasized that the US must show “an attitude of equality, mutual respect, and reciprocity” to resolve issues through negotiation.
The deteriorating relationship between the world’s two largest economies could see their goods trade fall as much as 80% – a $466 billion (about SGD 607 billion) drop, according to World Trade Organization forecasts.
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Dr Ngozi Okonjo-Iweala, head of the WTO, warned: “Our assessments, informed by the latest developments, highlight the substantial risks associated with further escalation.”
Meanwhile, the European Union had approved retaliatory tariffs against the US set to take effect on 15 April.
The EU plans to hit more than €20 billion (SGD 29.4 billion) worth of US products, including soya beans, motorcycles, and beauty products.
However, because these retaliatory measures had not yet gone into effect, the White House included the EU on the list of countries capped at the 10% baseline tariff.
Canada and Mexico, key US trading partners, were never subject to the baseline rate and remain exempt from the 10% tariff.
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