In a dramatic policy reversal, US President Donald Trump has announced a 90-day suspension on steep tariffs for over 75 countries – excluding China – citing diplomatic overtures, market instability, and the desire to give negotiations a chance. The unexpected announcement, made on 9 April, comes amid heightened fears of a global recession and follows days of extreme volatility in global financial markets.
Global Tariff Pause Sparks Market Rally
Wall Street reacted euphorically to the news, with the S&P 500 surging 9.5% in its biggest single-day gain since the 2008 financial crisis. The Dow Jones climbed 7.8%, while the tech-heavy Nasdaq soared over 12%. European and Asian markets followed suit, clawing back some of the heavy losses suffered earlier in the week following the imposition of sweeping US tariffs.
The market rally was triggered by Trump's decision to delay the implementation of new tariffs on dozens of trade partners, including Malaysia, Vietnam, South Africa, and the European Union. The president said these countries would now face a universal 10% baseline tariff rather than customised levies that, in some cases, exceeded 100%.
“I’ve authorised a 90-day PAUSE,” Trump posted on his Truth Social platform. “We don’t want to hurt countries that don’t need to be hurt — and they all want to negotiate.” He added that the move was in response to outreach from several nations expressing a willingness to resolve issues related to tariffs, trade barriers, currency manipulation, and non-monetary trade practices.
Bond Market Jitters Prompt Sudden Shift
Trump's tariff reprieve followed sharp criticism from economists, politicians, and financial analysts. Most notably, the US bond market experienced a sharp sell-off, with interest rates on government debt spiking to 4.5% – the highest since February – signalling investor anxiety about a potential recession.
Sources within the White House confirmed that Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick had met privately with Trump just a day before the announcement to discuss market concerns. “They were getting a little bit yippy, a little afraid,” Trump later remarked, using a term from sports to describe nervousness.
According to Paul Ashworth, Chief North America Economist at Capital Economics, “Although President Trump resisted the stock market sell-off initially, once the bond market began to wobble, it was only a matter of time before he adjusted course.”
China Hit with Punitive 125% Tariff
While most nations have been granted a temporary reprieve, China has not been so fortunate. In a show of economic aggression, Trump raised tariffs on Chinese goods from 104% to a staggering 125%, effective immediately. The move came in response to Beijing’s retaliatory tariffs on American imports, which rose from 34% to 84% earlier that same day.
“Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately,” Trump declared on social media.
The White House’s latest tariffs mark the most severe escalation yet in the US-China trade conflict, which began just a week earlier with what Trump dubbed "Liberation Day" – the date his new global tariffs were first implemented. Beijing responded swiftly and aggressively, pledging to “fight to the end” against what it called America’s “bullying tactics”.
China Responds: "US Must Show Respect"
China’s Ministry of Foreign Affairs denounced the increased US tariffs as abusive and urged Washington to return to the principles of equality and mutual respect if it hopes to reach a resolution. “The United States simply piles mistakes on top of mistakes,” China’s Finance Minister said. “This approach is not conducive to a healthy global trade environment.”
The World Trade Organization echoed these concerns, warning that the deteriorating relationship between the world’s two largest economies could lead to a collapse in trade volumes of up to 80% – a staggering US$466 billion (£363 billion) in losses.
Meanwhile, China issued travel advisories warning its citizens to “fully assess the risks” before travelling to the United States, further illustrating the growing tensions between the two powers.
Europe, Vietnam, and Others Await Further Negotiations
Among those temporarily spared further tariff hikes are key US trade partners such as the European Union, Vietnam, and Malaysia. Although these countries were initially targeted with levies ranging from 11% to 100%, the decision to hold back appears to have been a reward for diplomatic restraint.
The European Union, despite preparing retaliatory tariffs worth more than €20 billion on American goods including soybeans, motorcycles, and beauty products, had not yet implemented them. As a result, it too was included in the 90-day pause list.
Vietnam, which was facing a 46% tariff on its exports to the US, has welcomed the delay, as have multinational companies such as Nike and Apple, both of which rely heavily on manufacturing in Southeast Asia. Nike shares jumped 11%, while Apple soared nearly 15% on news of the policy shift.
Political Pressure Mounts Behind the Scenes
Trump’s abrupt about-face has also been linked to increasing political pressure from within Washington and influential backers from the business community. High-profile figures including Tesla CEO Elon Musk, hedge fund billionaire Bill Ackman, and Barstool Sports founder Dave Portnoy reportedly pushed for a softening of the tariff regime.
Ackman, who had publicly advocated for a 90-day pause, praised the president’s move, saying: “Thank you on behalf of all Americans.”
Democrats, however, were less impressed. Senate Majority Leader Chuck Schumer said the move was a sign that Trump was “reeling and retreating” under pressure, while critics on Wall Street warned that the damage may already have been done.
Looking Ahead: Will a Deal Be Struck?
Despite the dramatic reversal, Trump insisted he had not backtracked, but rather acted with strategic flexibility. “You have to be flexible,” he said. “A deal’s going to be made with China. A deal’s going to be made with every one of them.”
He added that while he could not imagine increasing tariffs on China any further, he was prepared to maintain pressure on Beijing until a satisfactory trade agreement is reached.
However, analysts remain sceptical. “It’s difficult to see either side backing down in the next few days,” Ashworth cautioned. “But we suspect that talks will eventually happen.”
In the meantime, the global economy remains in a precarious position. While markets have rebounded for now, the uncertainty surrounding US trade policy – and its long-term implications – continues to cast a long shadow over international commerce.
*Sources: Visual and Reference Credits to Social Media & various cross-references for context.
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