US President Donald Trump announced on Wednesday that he would freeze several of his new tariffs for 90 days, despite raising them more on Chinese imports.
Trump’s abrupt reversal occurred less than 24 hours after imposing high new tariffs on products from dozens of trading partners. The new trade obstacles have crushed markets, increased the likelihood of a recession, and triggered retaliatory responses from China and the European Union.
Trump said he would boost the duty on Chinese imports to 125 percent, up from the 104 percent level that went into effect at midnight. At the same time, he stated that he will lower them for other countries that are subject to his new targeted duties.
“I have authorised a 90-day pause, and a substantially lowered reciprocal tariff during this period, of 10pc, also effective immediately,” Trump wrote on social media. It is unclear how the move affects the European Union (EU) which earlier announced its own tariffs on US imports and goods.
US stock indexes rose in response to the news.
Bond yields fell from earlier highs.
Earlier in the day, China and the EU put fresh trade barriers on US goods in response to Trump’s hefty tariffs, deepening a global trade war that has battered markets and raised the prospect of a recession.
In the first set of responses, the EU said that it will apply 25% tariffs on a number of US imports. The 27-member EU faces US tariffs of 20% on most imports, with higher duties on automobiles and steel.
Countermeasures in Canada, a strong US ally and significant economic partner, also went into force today.
Targeted US tariffs on dozens of other countries, ranging from Japan to Madagascar, also went into effect, the latest in a slew of penalties that are dismantling a decades-old global trading order. Tariffs in the world’s largest consumer market now average more than 20%, according to various estimates, up from 2.5 percent before Trump took office.
Trump’s severe tariffs, which he claims are intended to eliminate US trade imbalances with numerous countries, have upended a decades-old global trading order, sparking worries of a recession and knocking trillions of dollars off big corporations’ market values.
Global markets plunged today as Trump’s eye-watering 104 percent tariffs on China went into force, and a brutal selloff in US Treasuries raised concerns that foreign capital were fleeing US assets.
Beijing has consistently opposed tariff rises and said earlier today it would take “firm and forceful” steps to protect its interests.
Its finance ministry later said in a statement that “additional tariff rates” on imports originating in the US would “rise from 34pc to 84pc”, effective from 12:01pm on Thursday.
“The tariff escalation against China by the US simply piles mistakes on top of mistakes [and] severely infringes on China’s legitimate rights and interests,” the ministry said.
Washington’s moves “severely damage the multilateral rules-based trade system”, it added.
Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said China “sent a clear signal today that the government will keep its stance on trade policies”.
“I don’t expect a quick and easy way out from the current trade conflict,” Zhang said, adding that “the damage to the two economies will become visible soon”.
“The outlook for international trade and global economic growth is highly uncertain.”
Beijing’s commerce ministry said in a separate statement that it would blacklist six US artificial intelligence firms, including Shield AI Inc. and Sierra Nevada Corp. The companies had either sold arms to Taiwan or collaborated on “military technology” with the island, the statement said.
Meanwhile, in reaction to US steel and aluminum tariffs, the EU will slap a 25% duty on corn (maize) starting April 15. US soybeans, which the EU imports in much larger numbers than corn, will be subject to tariffs beginning December 1.
European countries mostly feed maize to cattle, poultry, and pigs. The retaliatory measures will drive US grain out of European markets, where buyers had snatched up plentiful and low-cost US supplies this season.
US Treasury Secretary Scott Bessent, in an interview with Fox Business Network, said China’s new tariffs were unfortunate.
“They have the most imbalanced economy in the history of the modern world, and I can tell you that this escalation is a loser for them,” he said.
This week has already brought crisis-era volatility to markets, wiping trillions of dollars off the value of stocks and hammering commodities and emerging markets.