Trump hits pause on tariffs — except for China

In a dramatic about-face, U.S. President Donald Trump on Wednesday announced a 90-day pause on newly implemented tariffs for dozens of countries — a move that eased market turmoil but further escalated tensions with China.

The sudden shift came less than 24 hours after Trump’s sweeping tariffs took effect, sparking a days-long market selloff that wiped out trillions in global value. The S&P 500 surged 9.5% on the news, recovering ground after dipping below 5,000 for the first time in nearly a year.

While duties for most trading partners have been frozen, a 10% blanket tariff on all U.S. imports remains in effect. Canada and Mexico are still subject to 25% fentanyl-related levies unless their goods comply with USMCA rules of origin.

China, meanwhile, faces even steeper pressure. Trump announced the tariff on Chinese goods will rise to 125% — up from the 104% that came into force on April 2 — citing Beijing’s failure to back down and accusing it of currency manipulation.

“I thought people were jumping a little out of line,” Trump told reporters, hinting that the near-panic in markets influenced his decision. Treasury Secretary Scott Bessent framed the move as a planned strategy to pressure countries into talks.

“This was his strategy all along,” Bessent said. “And you might even say that he goaded China into a bad position.”

Still, businesses remain wary. Despite the market rally, Goldman Sachs lowered its recession forecast only slightly — from 65% to 45% — and warned of a 15% hike in overall tariff exposure.

Diplomatic efforts are underway, with U.S. negotiators now prioritising allies like South Korea, Japan and Vietnam. Talks may also touch on foreign aid and military ties.

But China, the U.S.'s second-largest import source, is not high on the list. “They want to make a deal,” Trump said. “They just don’t know how to go about it.”

For now, uncertainty lingers. Trump’s repeated reversals — this time following the steepest four-day market drop since early COVID — have left global capitals guessing.

Said Daniel Russel of the Asia Society: “Other countries will welcome the 90-day stay of execution — if it lasts. But the whiplash from constant zigzags creates more of the uncertainty that businesses and governments hate.”

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