In a sudden turn of events, President Donald Trump announced a 90-day pause on most of the tariffs imposed on global trade partners. The suspension, effective immediately, came hours after the administration rolled out a new “Liberation Day” tariff plan on April 2, 2025, which introduced a 10% baseline tariff on imports from nearly all nations, with higher duties on around 60 countries, including China.
The new announcement, made through a post on Truth Social, reduces the reciprocal tariff rate to 10% for countries that refrained from retaliation. However, China saw its tariff rate escalate from 104% to 125% due to its retaliatory actions, which increased from 34% to 84%. These tariffs will be enforced from April 10.
Immediate Economic Impact
The market reacted positively to Trump’s tariff pause, with U.S. equities surging. Major indices rose between 7% and 10%, helping recover a $6 trillion loss in U.S. stock values since the tariff announcement earlier in the month. The rally was seen as a sign of de-escalation in trade tensions, even as China’s exclusion from the pause suggests that the underlying issues between the two nations remain unresolved.
However, Asian markets were not as optimistic. Japan’s Nikkei fell by 3.5%, and Hong Kong’s Hang Seng dropped 4%, reflecting ongoing global uncertainty. The positive sentiment in the U.S. was also seen in a slight rise in U.S. Treasury yields, with the 10-year U.S. Treasury bond climbing from 4.27% to 4.40%.
Treasury Secretary’s Message
In a follow-up statement, U.S. Treasury Secretary Scott Bessent urged global trade partners to refrain from retaliation, emphasizing that those who avoid countermeasures would be “rewarded” with favorable treatment. His comments underscore the administration’s hope that the tariff suspension could lead to a more stable trading environment, though the situation with China remains a significant point of tension.
Key Takeaways
- 90-Day Tariff Pause: Aimed at non-retaliating nations, with tariffs reduced to 10%.
- China Tariffs: Increased to 125% due to its retaliatory actions, escalating tensions.
- Market Reactions: U.S. stocks surged, recovering $6 trillion in losses, but Asian markets fell.
- Treasury Remarks: U.S. Treasury Secretary Bessent warned countries not to retaliate, offering potential rewards.
This pause in tariffs could provide temporary relief for global markets but does little to resolve the underlying trade conflicts, particularly with China. The coming weeks will be crucial in determining whether this is a true step toward resolution or a short-term reprieve in a more complex trade dispute.
President Trump Picture on Flickr by Gage Skidmore CC-BY-SA-2-0
