Trump Shocks With Tariff Rollback, Cranks Up China Rate to 125%
U.S. President Donald Trump suddenly halted tariffs on most nations, causing jubilation in international stock markets on Thursday. However, he escalated tensions in an intense trade conflict with major competitor China.
Following several days of volatility in financial markets, shares on Wall Street as well as throughout Asia experienced significant gains following President Trump’s declaration that he would suspend an increase in tariffs for nearly all countries for a period of 90 days.
However, Trump stated that he was increasing tariffs on China to 125 percent due to a "lack of respect."
Trump refuted claims of reversing his stance on the tariffs, stating to journalists that "it's necessary to be adaptable."
"People were slightly out of position, becoming jittery and a bit scared," Trump stated. The word "jittery" in sports refers to losing one’s composure due to nervousness.
He mentioned that he had been closely monitoring the "highly complex" situation in the important U.S. bond market prior to making his choice.
He mentioned that he noticed people becoming somewhat uneasy yesterday evening,” as U.S. bond yields increased amid the stock market selloff — a significant warning sign for the economy since American sovereign government debt is typically considered a safe refuge for investors during turbulent periods.
Trump also predicted that trade deals will be made with all countries, including China, which has for now, refused to roll back on retaliatory tariffs on US goods.
"An agreement will be reached with China, and deals will be struck with all of them," Trump stated, although he also noted that Chinese leadership was somewhat uncertain about the approach.
Trump also said that he "can't imagine" increasing Chinese tariffs more than he has.
China duel
Since Trump announced extensive worldwide tariffs last week, labeling it as "Liberation Day," markets have experienced extreme volatility. This was followed by an unexpected halt on Wednesday.
Trump had imposed a 10 percent baseline tariffs on all countries which came into effect on Saturday, and higher rates on key trading partners like China and the European Union that he accused of cheating the United States, which activated on Wednesday.
However, as markets fluctuated once more, Trump made an unexpected declaration on his Truth Social platform stating that he had “authorized a 90-day HALT” on the increased tariffs, though the standard 10 percent rate would stay intact.
He mentioned that he made the choice following over 75 nations reaching out for negotiations without resorting to retaliation.
Meanwhile, Trump intensified his conflict with China, which responded by imposing retaliatory tariffs of 84 percent on American goods starting at noon.
The updated tariffs on U.S. imports go into effect at 12:01 p.m. (0401 GMT) on Thursday.
Beijing stated that Washington's actions add "errors upon errors."
Previously, the European Union initiated its own retaliatory action by announcing steps to target certain U.S. goods starting the following week, in response to American tariffs imposed on worldwide steel and aluminum shipments.
The 27-country alliance plans to impose tariffs exceeding 20 billion euros on various American goods such as soybeans, motorcycles, and cosmetics.
However, the EU did not respond to the distinct "Liberation Day" tariffs of 20 percent that were implemented on Wednesday.
'BE COOL!'
Stocks on Wall Street surged following President Trump's announcement of a halt.
The S&P 500 jumped 9.5 percent to reach 5,456.90, ending a severe streak of declines from the previous week.
On Thursday, Asian markets rebounded positively as Hong Kong, Taipei, Australia, and Tokyo saw significant gains upon opening following several sessions of declines.
Shares in China’s financial hub of Shanghai also rose, even as President Trump opted to increase tariffs further.
Prior to his shift, Trump stated that world leaders were hastening to negotiate "customized" agreements with the United States, with Japan and South Korea being two of the countries dispatching delegations to Washington.
"What I’m saying is, these nations are basically just flattering us insincerely,” Trump stated at a dinner with fellow Republicans on Tuesday evening.
Trump believes his policy will revive America's lost manufacturing base by forcing companies to relocate to the United States.
The billionaire former property tycoon has particularly raged against China, accusing it of excess production and "dumping" inexpensive goods on other economies.
As the trade conflict between the globe’s two largest economic powers continues without much sign of easing, China advised visitors on Wednesday to “carefully evaluate the potential dangers” prior to visiting the United States.
In separate developments, U.S. Defense Secretary Pete Hegseth cautioned about Chinese "threats" during his visit to Panama. The country’s canal is at the heart of a dispute between Beijing and Washington.