Donald Trump shelved plans to hike tariffs on most countries except China, unveiling a 90-day pause and pulling back from his global trade war after days of market turmoil and warnings of recession.
After insisting for days that he would hold firm on his aggressive trade strategy, Trump announced that all countries that had not retaliated against US tariffs would receive a reprieve – and only face a blanket US tariff of 10% – until July.
As Beijing prepared to slap punishing 84% tariffs on US goods from tomorrow, however, Trump said he would raise US tariffs on Chinese exports to 125% effective immediately.
Mexico and Canada will also be hit with a 10% US tariff, according to administration officials, escalating tensions with America’s closest trading partners and neighbors.
“More than 75 countries” have contacted the US federal government “to negotiate a solution” since Trump unveiled plans for steep tariffs on their exports, the US president claimed in a post on Truth Social.
Stock markets soared after the announcement. On Wall Street, the benchmark S&P 500 rallied by 8% and the Dow Jones industrial average jumped 6.6%.
“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, as he unveiled the latest US tariff assault on China.
“BE COOL,” he had declared earlier on Wednesday, insisting it was a “GREAT time” for companies to relocate to the US. “Everything is going to work out well,” he said.
Ultimately, he opted to back down – setting the stage for three months of frantic negotiations with dozens of countries.
China has pledged to retaliate against Trump’s latest salvo from Thursday, increasing tariffs on US exports from 34% to 84% and branding the US president’s decision to escalate the trade war “a mistake on top of a mistake”.
European Union member states, meanwhile, approved retaliatory 25% tariffs on up to $23bn in US goods – targeting farm produce and products from Republican states – from next week, in response to sweeping tariffs on steel and aluminum imposed by Trump last month.
For days, Trump’s insistence that his tariffs would permanent – and confusion over whether they might be lifted by mooted deals – had intensified concerns over the potential impact on consumers and companies around the world.
In the UK, two Whitehall sources sounded increasingly downbeat about the prospect of getting any tariffs on British exports mitigated in a deal with the US, with Keir Starmer, the prime minister, repeatedly emphasizing on Wednesday that they were “not a passing phase”.
Asked by ITV’s Robert Peston whether the 10% tariffs were here to stay, and whether the 25% car tariff could be negotiated down, Starmer said: “Look, I don’t know. We are negotiating and we hope to improve the situation.”
Recession is a “likely outcome” of the current turmoil, the JPMorgan Chase boss Jamie Dimon, one of the most influential figures on Wall Street, suggested before Trump announced the 90-day pause.
“No one’s wishing for that but hopefully, if there is one, it’ll be short,” Dimon told Fox Business. “Fixing these tariff issues and trade issues would be a good thing to do.”
While Trump swiftly noted on Truth Social that Dimon had declared fixing trade issues to be a “good thing”, he omitted to mention the executive’s assessment on the threat of recession.
Some of the biggest companies in the US also warned of significant disruption. Walmart, one of the world’s largest retailers, cautioned that its profits would be “harder to predict” as it grapples with the impact of new tariffs on costs and customer spending.
Delta Air Lines pulled its annual financial guidance, citing uncertainty and fading consumer confidence, with CEO Ed Bastian telling the financial news network CNBC: “We’re acting as if were going to a recession.”
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As the White House insisted the president was standing up for “everyday Americans”, and accused his predecessors of “selling out American workers to foreign countries”, some of the leading export markets for US firms detailed plans for tariffs of their own.
China led the way, pledging to match Trump’s aggression by hiking its own tariffs on US exports from Thursday.
“The US’s practice of escalating tariffs on China is a mistake on top of a mistake, which seriously infringes on China’s legitimate rights and interests and seriously damages the rules-based multilateral trading system,” the Chinese finance ministry said in a statement.
The EU plans to introduce 25% tariffs on scores of US goods, from almonds to yachts, with the first duties being collected from 15 April, while the bulk apply from 15 May and the remainder from 1 December.
While these tariffs are retaliating against Trump’s duties on steel and aluminum, the European Commission indicated that the second phase of the EU’s response – retaliatory measures against US tariffs on cars, and the blanket tariffs rolled out this month – are due to be presented “early next week”.
“The EU considers US tariffs unjustified and damaging, causing economic harm to both sides, as well as the global economy,” the commission said. The EU’s retaliatory tariffs on the US “can be suspended at any time”, it added in a statement, “should the US agree to a fair and balanced negotiated outcome”.
Ahead of Trump’s announcement, the FTSE 100 closed down 2.9% in London. The Hang Seng Index clawed its way out of the red to finish up in 0.7% in Hong Kong. The Nikkei 225 declined 3.9% in Tokyo.
Trump has repeatedly moved in recent days to assure his supporters that his strategy is the right way forward – and even declared late on Tuesday that he would expand his trade assault “very shortly” to include a major tariff on pharmaceutical imports.
“I know what the hell I’m doing,” he told political donors at the National Republican Congressional Committee’s annual fundraising dinner in Washington. “I know what I’m doing. And you know what I’m doing, too. That’s why you vote for me.”
Democrats have accused the president of economic havoc for which millions of Americans will pay the price.
“Donald Trump has spectacularly failed at the one thing people wanted him to do,” said Chuck Schumer, the Senate minority leader. “Instead of lowering inflation, he’s made it much worse. Instead of strengthening the economy, he has singlehandedly teed us up for a recession.”
