President Donald Trump has announced a 90-day pause for countries hit by higher US tariffs, but escalated a spiralling trade war with China.
In a dramatic change of policy, just hours after levies against roughly 60 of America’s trading partners came into effect, Trump said he was authorising a universal “lowered reciprocal tariff of 10%” while negotiations continued.
At the same time he increased tariffs on goods from China to 125%, accusing Beijing of a “lack of respect”, after it had retaliated by saying it would impose tariffs of 84% on US imports.
This comes a week after Trump announced import taxes on all goods entering the US, in the biggest upheaval of international trade in decades.
His plan set a baseline tariff of 10% on all imports, which remains in place, but also higher rates on partners the White House described as the “worst offenders” for what the president considers to be unfair trade practices.
This included the European Union, Vietnam, South Africa and many more.
Major market turmoil followed Trump’s tariffs announcement last week, with sell-offs sparking trillions in losses across the world, many Americans fearing price rises, and some analysts predicting increased odds of recession.
On Wednesday, before Trump said he would suspend higher tariffs on goods from most countries, the US government saw interest rates on its debt spike to 4.5% – the highest level since February.
Hours later, when the suspension was announced, US shares rocketed with the S&P 500 soaring 7% in afternoon trading.
Announcing the change of plan on his Truth Social platform, Trump said more than 75 countries had contacted US officials to negotiate trading solutions.
The latest update means all 60 of the so-called “worst-offending” countries, which had been due to be hit with the US’s higher tariffs, will now instead receive the lowered rate of 10%, except China.
Trump said the additional tariff on China would be effective immediately, writing: “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.”
US Treasury Secretary Scott Bessent insisted the change of policy was not influenced by the global falls, but senior Democrat Chuck Schumer said the decision showed Trump was “reeling and retreating”.
The ongoing stand-off between China and the US – the world’s two biggest economies – began when Trump announced the new tariffs last week.
China was hit with an additional 34% tariff on top of a 20% levy the president had put in place earlier this year. However, Beijing was quick to retaliate with a 34% tariff on US imports to China.
In response, Trump threatened an additional 50%, bringing the total to 104% on Tuesday, if Beijing did not back down. China did not change course and said it would “fight to the end” if the US “insists on provoking a tariff war or trade war”.
Just hours after the 104% tariffs from the US kicked in earlier, Beijing announced it would raise its own tariffs on American goods from 34% to 84% from Thursday.
China’s foreign ministry spokesman Lin Jian said on Wednesday the US “continues to impose tariffs on China in an abusive manner”.
He said China opposes such “bullying practices” and the US must show “an attitude of equality, mutual respect, and reciprocity” if it hopes to resolve issues through negotiation.
