U.S. President Donald Trump unexpectedly softened his global trade stance on Wednesday by announcing a 90-day pause on most tariffs—while simultaneously escalating economic pressure on China, deepening the trade standoff between the world’s two largest economies.
Following days of market turbulence, Wall Street surged in response to the announcement. Stocks rebounded sharply, with the S&P 500 climbing 6.0% to 5,281.44, ending a week-long losing streak.
“I have authorized a 90-day PAUSE on higher tariffs that took effect on Wednesday,” Trump wrote on his Truth Social platform. He explained that more than 75 countries had reached out to negotiate and chose not to retaliate, prompting his decision.
However, the flat 10% tariff on all countries that began on Saturday will remain in place. This marks a significant shift from Trump’s previous hardline stance, which included steep levies even on close U.S. allies.
While easing global pressure, Trump intensified his rhetoric against Beijing. “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,” he declared.
Earlier in the day, the White House had raised tariffs on Chinese goods to 104%, prompting an immediate response from Beijing. China retaliated by increasing its tariffs on U.S. imports to 84%.
“At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A. and other countries are no longer sustainable or acceptable,” Trump added.
Meanwhile, the European Union launched its own retaliatory measures, targeting over €20 billion worth of U.S. goods—including soybeans, motorcycles, and beauty products—beginning Tuesday. The move came in response to American tariffs on global steel and aluminum exports. However, the EU notably held off on retaliating against the 20% U.S. tariffs that took effect just after midnight on Wednesday.
Trump had previously declared the new baseline 10% tariffs during what he called “Liberation Day,” with higher rates set for countries with significant trade surpluses with the U.S., including China and the EU.
The global market reaction was swift. While U.S. stocks rallied following Trump’s pause announcement, European and Asian markets, as well as commodities like oil, had earlier slumped amid fears of an escalating trade war.
U.S. bond yields also spiked due to a sell-off in government debt—traditionally a safe haven for investors in times of uncertainty—signalling growing concerns over global economic stability.