Trump Hits the Brakes on Tariffs; Doubles Down on China

US President Donald Trump announced a 90-day suspension of sweeping tariffs imposed on dozens of countries. China, however, is not considered in this suspension. Instead, the country now faces even steeper duties. Trump escalated his trade offensive against the world’s second-largest economy, raising tariffs on Chinese imports from 104% to a staggering 125%. The increase came after Beijing announced an 84% retaliatory tariff on US goods, further intensifying tensions between the two countries.

“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. At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable.” Trump wrote on his Truth Social account. 

Markets responded favorably to the tariff pause, with the Dow Jones Industrial Average going up over 2,300 points, the S&P 500 rising 7.4%, and the NASDAQ gaining nearly 10%. Earlier today, Trump had posted on his Truth Social account, “THIS IS A GREAT TIME TO BUY!!! DJT." Shares of Trump Media & Technology Group, which trades under the symbol “DJT,” surged over 20% following the announcement, reports CNN.

Treasury Secretary Scott Bessent, who reportedly met with Trump at Mar-a-Lago to discuss trade policy, described the pause as part of a long-term strategy. “This was his strategy all along,” Bessent told reporters, praising Trump for showing “great courage to stay the course until this moment.”

Still, the announcement seemed to catch members of the administration off guard. US Trade Representative Jamieson Greer testified on Capitol Hill just as Trump’s decision became public. Pressed by lawmakers, Greer admitted he was unaware of the final decision until it was announced, despite knowing it was under consideration. “You just found out three seconds ago, sitting here,” said Rep. Steven Horsford told Greer, accusing the administration of lacking a coherent strategy.

Bessent insisted that Trump would remain personally involved in ongoing negotiations with countries willing to negotiate with the United States. “No one creates leverage like President Trump,” he said. “The message to our trade partners is simple: Do not retaliate and you will be rewarded.” Commerce Secretary Howard Lutnick echoed Bessent’s sentiment, describing Trump’s announcement post on Truth Social as “one of the most extraordinary” of his presidency.

Tariffs as Leverage

Trump’s tough stance on China underscores his belief that tariffs are a key bargaining chip. He claimed that more than 75 countries have reached out to US officials seeking to negotiate better trade terms since the new tariffs were announced. However, analysts warn that the uncertainty surrounding Trump's trade policy may have lasting consequences, as reported by Reuters.

Chris Brigati, Chief Investment Officer, SWBC, said the shifting policies make it “very difficult for companies to make decisions and to execute on business plans.” As an example, Delta Airlines just recently withdrew its full-year guidance due to a lack of certainty in terms of global trade. Paul Ashworth, Chief North American Economist, Capital Economics, meanwhile, thinks that the 90-day pause could be extended multiple times and eventually resemble the 10% universal tariff Trump campaigned on. “As for China, it is difficult to see either side backing down,” he said.

Marcus Brookes of Quilter Investors warned that Trump’s unpredictable approach is undermining economic confidence. “Even with this latest announcement, we still have the uncertainty from the fact this is just a 90-day pause,” he said. “Many consumers and businesses cannot plan with any sort of confidence and may see a recession hit regardless.”

Next Steps Unclear

The administration has offered few details on what happens after the 90-day window expires. Negotiations are reportedly underway but the path forward remains uncertain. Meanwhile, US-China relations continue to deteriorate. Beijing’s latest round of tariffs and its vow to “fight to the end” suggest a prolonged standoff. Analysts like Wendong Zhang of Cornell University note that China has reduced reliance on US products since the last major trade war, and now has broader public support to push back.