WASHINGTON — Facing a global market downturn, President Donald Trump abruptly suspended his tariffs on most nations for 90 days, while simultaneously increasing the tax rate on Chinese imports to 125%. This move appears to focus the trade dispute mainly between the U.S. and China, with the S&P 500 stock index surging 9.5% following the announcement. However, the administration’s strategy remains uncertain due to upcoming country-by-country negotiations.

Under pressure from volatile financial markets, Trump paused the tariffs, which had been criticized for causing uncertain business environments and shrinking retirement savings. Despite some administration members suggesting the reversal was always part of the plan, the president later stated that the financial markets’ impact on people’s “yippey” feelings and fears was a factor in his decision.

Trump insisted that while he expects to reach deals, he emphasized that “nothing’s over yet”. He had been monitoring the bond market and noticed its improvement following his decision, despite acknowledging it as “tricky”. The 10% tariff imposed on most nations is lower than the planned 20% and 25% rates on goods from the EU, Japan, and South Korea. Negotiations will be tailored to each country’s situation.

Treasury Secretary Scott Bessent stated that the talks will involve a series of potential deals and assumes allies will negotiate in good faith. Commerce Secretary Howard Lutnick later clarified that requests from other nations for negotiations, not market fluctuations, led to the decision. Market turmoil had been building before Trump’s move, with concerns over the impact of his tariffs on a potential recession and retaliation from trade partners.

Despite some mixed messages and potential implications for the economy, including possible recession and impacts on businesses and travel demand, Trump remains optimistic about future economic prospects.

Source: https://time.com/7276107/trump-tariff-pause/