In a stunning shift that has sent financial markets soaring and global capitals scrambling for clarification, President Trump has announced a 90-day pause on newly imposed tariffs for most U.S. trade partners, while simultaneously escalating his economic offensive against China.
In a post on Truth Social, Trump said, “I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%,” citing outreach from “more than 75 countries” who had not retaliated and were seeking negotiations. But in the same breath, he targeted China with new penalties: “I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately.”
The bifurcated move effectively repositions the U.S. trade war from a global confrontation to a focused economic clash with Beijing. In doing so, Trump stunned analysts, surprised officials within his own administration, and ignited what could be one of the most volatile periods in recent U.S. trade history.
Global Relief, Chinese Reprisal
The tariff suspension applies to dozens of countries hit by reciprocal duties that took effect just hours before Trump’s reversal. The blanket 10% import duty remains in place, down from rates that had reached as high as 50% under the new “reciprocal” framework. The White House did not release a full list of affected countries. Still, nations such as Canada, Mexico, and members of the European Union are expected to see partial relief. At the same time, sector-specific tariffs on autos, steel, aluminum, and other goods remain intact.
China, however, faces steeper costs. In response to U.S. hikes earlier this month, Beijing raised its tariffs on U.S. goods to 84%, prompting Trump to increase the tariff on Chinese imports from 104% to 125%. “China wants to make a deal,” Trump told reporters, “They just don’t know how quite to go about it.”
Chinese officials offered a sharply different interpretation. The State Council Tariff Commission called the U.S. escalation “a mistake upon mistake” and accused Washington of “severely infringing upon China’s legitimate rights.” Beijing has vowed to “fight to the end.”
Market Rebound Amid Chaos
Financial markets, reeling for days amid uncertainty, responded with a dramatic rebound. The S&P 500 surged 7%, the Nasdaq jumped over 9%, and the Dow Jones Industrial Average climbed nearly 3,000 points in a single session—marking one of the best trading days in years. Tesla’s stock leapt 22% and the tech-heavy Nasdaq posted its second-best day on record.
“Markets had been looking for a reason to rally,” said Carol Schleif, chief market strategist at BMO Private Wealth. “The 90-day suspension does allow nice breathing room to allow negotiation to settle in and market valuations have clearly been reset. Yet the uncertainty for companies remains.”
Bond yields, which had surged earlier in the day, eased after the announcement. The 10-year Treasury note auction saw strong demand, easing fears of a sustained selloff.
Strategic Recalibration or Political Whiplash?
Inside the White House, officials framed the move as part of a long-planned strategy. “This was his strategy all along,” Treasury Secretary Scott Bessent told reporters. “You might even say he goaded China into a bad position.” Bessent added that the administration would use the next 90 days to negotiate “bespoke” agreements with individual countries.
But the surprise announcement caught many off guard, including U.S. Trade Representative Jamieson Greer, who admitted during a Capitol Hill hearing that he wasn’t informed until after the policy was made public.
The inconsistency prompted criticism from business leaders and political opponents alike. “This is government by chaos,” said Senate Minority Leader Chuck Schumer. “He keeps changing things from day to day.”
Economists echoed that concern. JPMorgan Chase CEO Jamie Dimon warned that tariff-induced uncertainty could compound over time, impacting inflation and consumer sentiment. RSM’s Joe Brusuelas said the economy still faces “simultaneous shocks” that could tip it into recession, even with the pause in place.
All Eyes on the Next 90 Days
While many businesses welcomed the short-term reprieve, few see the situation as resolved. The National Foreign Trade Council noted that baseline tariffs and targeted levies on critical sectors, such as electronics, textiles, steel, and aluminium, remain in effect, and more duties could follow.
“This is a giant meltup, because the announcement was the walkback the market needed to see,” said Alex Morris, chief investment officer at F/M Investments. “But of course, there is no promise that we’ll manage to solve anything in 90 days.”
The move appears designed to isolate China diplomatically while re-engaging allies economically—a “good cop, bad cop” approach to trade diplomacy. Whether this gambit results in concessions or further escalation remains uncertain.
For now, investors and international leaders alike are bracing for what comes after the 90-day clock runs out. As Trump himself put it: “Nothing’s over yet.”