Trump Boosts China Tariffs to 125%; Pauses Rates on Most Other Countries for 90 Days

In the midst of a worldwide financial downturn, U.S. President Donald Trump declared an additional tariff increase on goods coming from China to 125 percent on Wednesday. However, he introduced a 90-day suspension on stringent duties targeting most other countries.

The markets rallied after the announcement, with the key S&P 500 index climbing approximately 10 percent following President Trump’s statement made around mid-afternoon. This gain reversed a roughly 20 percent decline that had occurred across the last four trading days.

Following the announcement, Trump told journalists that before halting what he referred to as "reciprocal" tariffs, approximately 75 nations had urged him to reach an agreement. He also anticipated that China, led by President Xi Jinping, would eventually do the same.

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China aims to strike a deal. However, they remain uncertain about the approach. As you understand, these are rather proud individuals," he stated. "I have great familiarity with President Xi; he embodies pride. Although they haven’t yet determined their strategy, they will eventually find a way forward as they continue to work through this challenge.

Trump said he did not expect to raise the levies on Chinese imports above 125 per cent. "I can't imagine it. I don't think we'll have to do it more," he said. "No, I don't see that."

When asked if he aimed to create an alliance against China regarding trade policies, the president denied this notion and pointed fingers at the previous US president, Joe Biden, attributing the current issues in global trade to his administration. He further stated, "I have numerous expectations from China."

Trump also said talks were moving along over the ownership TikTok. The US Congress passed a law last year that forced its Chinese owner, ByteDance, to either sell the app or face a US ban, although Trump has extended the deadline to allow for an eventual deal.

"When discussing the potential of a TikTok agreement, we must await further developments concerning China," he stated.

The president expressed his willingness for a meeting with the Chinese president. He stated, "He's a personal friend of mine," adding, "Yes, I would certainly meet with him."

Trump's latest tariff move postponed, at least temporarily, what had been the start of an unprecedented trade war against most of the world, narrowing it to one between Washington and Beijing. But most countries other than China will revert to the baseline 10 per cent tariffs Trump announced last week for the duration of the 90-day period.

Prior to the most recent tariff increase, Trump’s attempts to get Chinese officials to negotiate resulted in an accumulated total of extra U.S. import taxes on Chinese goods amounting to 104 percent.

Earlier on Wednesday, Beijing reacted by announcing That it would add another 50 percent tariffs on all imports from the U.S., bringing the total tariff rate to 84 percent.

By the end of the Wednesday session, the S&P had risen by 9.5 percent; the Dow Jones Industrial Average surged approximately 3,000 points, equivalent to an increase of about 8 percent; meanwhile, after taking a hit the prior week, the technology-focused Nasdaq jumped over 12 percent.

Nonetheless, specific information about Trump’s strategies to reduce tariffs on trading partners aside from Beijing was not readily available at first glance, and worries persist as U.S.-China commerce makes up a substantial part of all American international trade.

Last year, China ranked as America’s second-largest source for imports based on value, amounting to $439 billion, according to US government statistics. This figure came right after Mexico, which exported merchandise totaling $506 billion.

While addressing reporters at the White House, Trump celebrated his approach of threatening increased tariffs as a successful tactic, particularly regarding dealings with China.

Someone needed to fire the shot. I was ready to do so," Trump stated. "When you examine this issue, not just regarding China, but clearly, China has been the most significant violator historically, along with some others.

However, someone needed to take action. They had to halt their efforts as it was unsustainable.

Trump added that he was willing to consider cutting deals with businesses that would be severely affected by the tariffs.

"Some individuals face a greater impact due to the nature of their company, and we will examine this further," he stated.

Almost you can't even pick up a pencil to write on paper. I believe it's more of an instinct rather than anything else.

When asked about his abrupt change of stance on tariffs for nations aside from China—after pledging not to yield—he stated that the moment felt appropriate. Despite this, he couldn’t hide his evident delight at the surging stock market.

He stated, 'It’s essential to demonstrate some adaptability, and I can certainly do that. Sometimes, you need to find ways to get under, around, or over obstacles.'

Administrative authorities mentioned that henceforth, they would view positively those nations which refrained from threatening retaliatory actions against the U.S.

Shortly after Trump's statement, Treasury Secretary Scott Bessent spoke with reporters and downplayed the notion that significant drops in U.S. financial markets over recent days pressured the president into making this decision.

He restated Trump's assertion that roughly 75 trade partners had expressed interest in negotiations.

Bessent asserted that using tariffs as a negotiating tool was always Trump's approach.

"One could argue that (Trump) provoked China into a unfavorable stance," as Beijing reacted with countermeasures, he explained.

They have demonstrated their role as problematic entities globally, and we are ready to collaborate with our allies and trade partners who chose not to respond with retaliation.

Bessent said Trump's trade team was meeting with negotiators from Vietnam in Washington on Wednesday, and that Japan "was going to send a deal team over". Hanoi had been hit with a 46 per cent tariff - one of the highest rates among the so-called "reciprocal" tariffs - and Japan's rate was 24 per cent.

Bessent did not respond to questions about why the 90-day pause also applied to the EU even though the bloc announced retaliatory tariffs versus the United States earlier on Wednesday.

Trump's suspension of tariffs occurred as numerous economists and Wall Street leaders warned about potential negative consequences, including steering the U.S. towards a recession, increased inflation, and employment declines due to these taxes.

For instance, on Monday, billionaire fund manager Bill Ackman — who contributed to Trump’s election campaign — pressed the president to suspend the tariffs. He warned of potentially triggering “an economically induced, self-created ice age” if he didn’t reconsider.

According to The Wall Street Journal, Donald Trump viewed an interview featuring JPMorgan Chase CEO Jamie Dimon on Fox News on Wednesday prior to his sudden policy shift. In the interview, Dimon stated that a potential economic downturn seemed like a probable result of Trump's approach.

The White House Press Secretary, Karoline Leavitt, stated that the idea which suggested global reliance shifting towards China when Washington increased trade tensions has been shown to be incorrect.

We have observed the contrasting outcome. Countries worldwide are referring to the United States of America instead of China due to their reliance on our market," she stated. "As the secretary mentioned, the president demonstrated significant bravery in deciding to counteract China with even greater measures.

Daniel Russel, who serves as a vice-president at the Asia Society Policy Institute, stated that Trump was facing criticism from his own allies for seemingly obscuring the true focus, which is primarily China.

"The hiatus has left China isolated as the sole target for 125 percent tariffs, whereas others have been granted a temporary exemption," stated Russel, who previously served on the National Security Council under President Barack Obama.

However, the rapid shifts caused by continuous changes lead to increased uncertainty, which both businesses and governments detest.

Russel noted that Beijing is not expected to alter its approach, which mainly involves maintaining a steadfast position, withstanding the pressure, and waiting for Trump to overplay his hand.

Beijing thinks that Trump views concessions as a sign of weakness, so yielding only leads to increased pressure.

Terry Haines from Pangaea Policy, a Washington-based consulting company, described the exclusive emphasis on China as an element of "uncertain magnitude."

Haines stated that the heightened tensions between the United States and China pose significant geopolitical risks that won’t dissipate, potentially creating an undercurrent with unpredictable intensity.

"The tariff discussions are still ongoing, and there’s a significant chance that three months from now, we’ll find ourselves in a largely comparable position," he noted.

Wall Street must not fall into the trap of believing it has emerged victorious—despite the fact that this is precisely what it will do.

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The article initially appeared on the South China Morning Post (www.scmp.com), which is the premier source for news coverage of China and Asia.

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