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In a stunning reversal, President Donald Trump announced Wednesday that he is pausing his most aggressive round of tariff hikes for 90 days for most U.S. trading partners—while simultaneously increasing duties on China to an unprecedented 125%.
Trump’s decision, shared in a social media post at 1:26 p.m., came just days after markets plunged and business leaders warned of catastrophic fallout from the escalating trade war. He cited a willingness from more than 75 countries to enter discussions as the primary reason for the pause.
“More than 75 nations didn’t retaliate and want to discuss. I’m giving them 90 days,” Trump wrote. “China, on the other hand, has shown no respect — so their rate is now 125%.”
Markets responded with euphoria. The S&P 500 jumped more than 9%, the Nasdaq soared 12%, and the Dow rose nearly 3,000 points. Tesla, one of the hardest-hit stocks in recent weeks, surged 22% on the news.
Despite the pause, Trump made it clear the trade war is far from over. A 10% across-the-board duty remains in place, and the new 125% tariff on Chinese goods took effect immediately. Products affected range from iPhones to toys, further straining American companies dependent on Chinese imports.
“I did a 90-day pause for the people that didn’t retaliate,” Trump said. “That’s what I did with China, because they did retaliate. So we’ll see how it all works out. I think it’s going to work out amazing.”
While Canada and Mexico will continue to benefit from tariff-free trade on USMCA-compliant goods, non-compliant imports face 25% duties. Canadian fertilizer and energy imports will face a lower 10% tariff.
The White House didn’t release a full list of countries covered by the pause, and several trading blocs, including the EU, are still preparing retaliatory tariffs set to launch next week.
Treasury Secretary Scott Bessent confirmed that other import taxes—such as those on autos, steel, and aluminum—will remain. Additionally, upcoming levies on products like lumber and pharmaceuticals are still on track.
Despite Wednesday’s rally, investor anxiety lingers. “Would you want to own highly volatile U.S. stocks whose price depends on whether POTUS had a good night’s sleep?” billionaire investor Bill Gross posted on X.
Trump initially rolled out the aggressive tariff policy on April 2, calling it “Liberation Day.” Since then, an estimated $6.6 trillion in global market value has been erased. The about-face appears designed to regain leverage in negotiations, according to Bessent.
“President Trump created maximum negotiating leverage for himself,” Bessent said.
But analysts remain skeptical of the White House’s ability to strike comprehensive deals with dozens of nations in just three months. Greta Peisch, former general counsel for the U.S. Trade Representative under Biden, warned, “Even with a few trading partners, this would be a monumental task.”
Commerce Secretary Howard Lutnick confirmed he sat with Trump during the announcement. “The world is ready to work with President Trump to fix global trade,” he said.
Meanwhile, China has escalated its own retaliatory tariffs to 84%, targeting American agriculture, electronics, and machinery. U.S. companies exporting to China are bracing for additional losses.
Still, Trump’s administration insists the U.S. holds the advantage. “China has an export-driven, flood-the-world model,” Bessent argued. “Their economy will feel this far more than ours.”
As the 90-day clock ticks down, business leaders, markets, and trading partners will be watching closely to see whether this latest policy shift is a temporary reprieve—or just the eye of the storm.
