In a dramatic shift that shook global markets, U.S. President Donald Trump announced a sudden pause on new tariffs for dozens of countries—just one day after they were imposed. This unexpected reversal sent global stock markets soaring, even as tensions with China escalated further.
“You have to be flexible,” Trump told reporters, walking back his earlier hardline stance.
The move came after financial markets plummeted, wiping out trillions in global value and causing extreme volatility not seen since the early days of the COVID-19 pandemic. The S&P 500 alone saw a 9.5% rebound, and Japan’s Nikkei shot up 8%, reflecting global relief.
Tariff Pause: Relief for Some, Not All
While many countries received temporary relief from new U.S. tariffs, the pause isn’t universal. A 10% blanket duty on most U.S. imports remains. Crucially, the tariffs on China were increased further, from 104% to a staggering 125%.
“This was his strategy all along,” said U.S. Treasury Secretary Scott Bessent. “He goaded China into a bad position.”
Despite the relief, Canada and Mexico are still bound by fentanyl-related tariffs unless they meet strict trade agreement standards. And industries like automotive, steel, and aluminum will continue facing prior tariffs.
China in the Crosshairs
Trump’s message is clear: the trade war with China is far from over. In response, China slapped 84% tariffs on U.S. imports and vowed to “fight to the end.” Chinese sellers on Amazon are now preparing to raise prices or exit the U.S. market due to the unprecedented pressure.
“The U.S. and China are currently in a powerplay game of brinkmanship,” noted ING’s Chris Turner.
China is also exploring new trade alliances with the EU and Malaysia, although countries like Australia are staying neutral, refusing to side with Beijing.
A Fragile Recovery
While markets bounced back, analysts warn the damage might be long-lasting. Business investments and household spending are showing signs of slowing down. According to a recent survey, three out of four Americans expect prices to rise in the coming months.
Still, Goldman Sachs lowered its recession odds from 65% to 45% post-announcement, suggesting some confidence in recovery—though concerns remain due to lingering tariffs.
Final Thoughts
Trump’s latest tariff twist has injected fresh uncertainty into global trade but offered temporary relief for some. While Wall Street is cheering the pause, the intensifying conflict with China could lead to more shocks.
“China wants to make a deal,” Trump said. “They just don’t know how quite to go about it.”
The next 90 days will be crucial as over 75 countries engage in talks with U.S. officials. Whether this move signals a shift toward diplomacy or simply a pause in the storm remains to be seen.
