President Donald Trump made a surprising move on Wednesday, announcing new tariff policies that paused some rates while sharply increasing others.
This decision came after days of market declines and growing concerns about global trade. The changes brought relief to investors and sparked a significant rally in the stock market.
A Temporary Pause on Tariffs
Trump revealed that tariffs on imports from most US trading partners would drop to 10% for the next 90 days. This pause is meant to give the United States time to negotiate trade deals with nearly 90 countries.
The announcement came just hours after those nations faced higher reciprocal tariffs, which had ranged from 11% to 50%. These stiffer rates had started on Wednesday morning, following Trump’s earlier pledge to impose broad tariffs on over 180 countries. ⁽¹⁾
At the same time, Trump took a harder stance on China, the United States’ third-largest trading partner. With immediate effect, he increased import duties from China to 145%.
In a social media post, he explained that China’s “lack of respect” for international markets was the reason. A tit-for-tat escalation in the trade dispute was demonstrated earlier that day when China raised its own duties on American imports to 84%. ⁽²⁾
Trump told reporters at the White House that he made the pause because some countries were “jumping out of line” and getting “a little bit afraid.” He said more than 75 nations had already reached out to negotiate after his initial tariff plan last week. ⁽³⁾
Stock Markets Bounce Back
The financial markets reacted strongly to Trump’s announcement. After four days of losses, the S&P 500 index jumped 9.5%. The Nasdaq Composite rose 12.16% and the Dow Jones Industrial Average climbed 7.82%, up 2,942.91 points. ⁽⁴⁾
Investors were concerned about an economic downturn from Trump’s original tariff plan. The pause gave them a window to buy stocks that had been hit hard. The 90-day pause might give some room for negotiations, though uncertainty still looms.
Following the news, Goldman Sachs even retracted its 2025 recession statement and went back to its initial growth forecast. But Charles Schwab’s Kevin Gordon warned that it’s difficult to make any firm decisions at this time as businesses might struggle to plan when policies shift daily, which could hurt the economy if it continues. ⁽⁵⁾
Mixed Reactions from Washington
Trump’s choice did not sit well with everyone. New York Democrat and Senate Minority Leader Chuck Schumer criticized the President’s strategy.
He stated that Trump was “reeling” under criticism from Democrats and Americans concerned about the effects of the tariffs, he added, calling it “government by chaos.” Schumer contended that Trump’s advisers’ frequent changes and internal strife demonstrate a lack of knowledge about international commerce. ⁽⁶⁾
Trump’s team, however, supported the action. Despite prior denials that tariffs would be suspended, Treasury Secretary Scott Bessent told reporters at the White House that this was always part of Trump’s goal. ⁽⁷⁾
What’s Next?
Although Trump’s tariff halt has calmed markets, there are still concerns about his long-term goals. Although the US has 90 days to negotiate, tensions with a major trade partner may worsen because of the steep hike in China’s tariffs.
First-quarter earnings of big banks like JP Morgan Chase on Friday are events that investors are keeping an eye on. These reports could provide insight on the economic impact thus far of Trump’s trade policy and tariffs.
