We reached the latest peak in the tariff roller coaster ride Wednesday when President Donald Trump announced a 90 day pause on most tariffs, but an increase to the tariffs on China.
“Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately,” said the president in a Wednesday afternoon Truth Social post. This comes just a week after his “Liberation Day” announcement regarding tariffs on countries around the world.
Since Trump took office in January, he has issued multiple announcements and orders regarding tariffs and has also been quick to pause them, then start them again. These moves have mostly concerned some of the U.S.’s most frequent trade partners: China, Canada and Mexico, but Trump’s “reciprocal” tariff plans included many more countries.
In an interview with CNBC, Treasury Secretary Scott Bessent said that the administration’s goal with a ‘tariff wall” is to bring jobs back to the U.S. Trump has also mentioned blocking illicit fentanyl from entering the country as a motivation for the tariffs.
After Trump announced his reciprocal tariff plan would begin last week, markets dropped and experts were concerned, especially after China announced retaliatory tariffs on U.S. goods. Barry Naughton, economist and chair of the Chinese International Affairs School of Global Policy and Strategy at UC San Diego, told Audacy that the tariffs were poised to make life more expensive for Americans.
“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 continued in his Wednesday post.
However, the next thing he said actually resulted in a stock market rebound.
“Conversely, and based on the fact that more than 75 Countries have called Representatives of the United States, including the Departments of Commerce, Treasury, and the USTR, to negotiate a solution to the subjects being discussed relative to Trade, Trade Barriers, Tariffs, Currency Manipulation, and Non Monetary Tariffs, and that these Countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately,” Trump said.
Bessent said all countires except China would go back to the 10% baseline tariff rate as negotiations take place, per CNBC. He also said the pause would not apply to sector tariffs.
According to CNBC, stocks surged Wednesday after the announcement.
It said the S&P 500 skyrocketed by 7%, “on pace for its biggest one-day gain in five years,” and that Dow Jones Industrial Average rose 2,331 points, or 6.1%, its biggest gain since 2020. The Nasdaq Composite also jumped 8.8%.