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On Wednesday, President Donald Trump officially unleashed his latest volley of tariffs, levying extensive “reciprocal” taxes on the United States’s most prominent trade partners. As stock markets wavered as China and the European Union vowed to inflict their own retaliatory tariffs, Trump urged the American people to chill out. “BE COOL! Everything is going to work out well. The USA will be bigger and better than ever before!,” he said on TruthSocial.
Then he caved. The president announced Wednesday afternoon that he had “authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately.”
But Trump said the United States would be increasing its already staggering tariffs against China, raising the amount from 104 percent to 125 percent due to the country’s “lack of respect.”
“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,” he said.
The impact of Trump’s announcement was immediate and obvious. In the minutes after, the S&P 500 went up six percent, the Nasdaq Composite gained eight percent and the Dow Jones Industrial Average rose by nearly six percent.
It was a remarkable about-face for the president whose own administration rejected the idea of a possible 90-day pause just days earlier. On Monday, an unsubstantiated rumor that Trump was mulling such a move briefly boosted the markets as investors believed an end to the global trade war was in sight. However, the White House quickly put an end to the speculation. “Wrong. Fake News,” an official X account read.
But naturally, top federal officials praised Trump’s backtracking as more proof of the former businessman’s deal-making prowess. Howard Lutnick, the Commerce Secretary, wrote on social media, “Scott Bessent and I sat with the President while he wrote one of the most extraordinary Truth posts of his Presidency. The world is ready to work with President Trump to fix global trade, and China has chosen the opposite direction.”
