In a stunning U-turn, President Donald Trump announced an unexpected 90-day pause on most of the “reciprocal” tariffs previously imposed on various countries, except for China.
This marks a significant shift in U.S. trade policy, surprising many after Trump’s firm stance on maintaining high tariffs on several nations. The move comes in the face of growing pressure from global markets and trading partners, particularly after a volatile period for financial markets and fears of an impending recession.
Key details of the Tariff Pause
Trump’s new directive, announced on April 9, 2025, suspends high tariffs on most countries, reducing the levy to a universal 10% for the next three months. While the decision was hailed by many as a sign of flexibility in U.S. trade policy, it excludes China from these concessions. For China, tariffs will rise to 125%, up from 104%, after Beijing announced retaliatory measures against U.S. goods.
Trump’s social media announcement highlighted his frustration with China’s trade practices, stating that the new tariff rate would be “effective immediately.” He continued, expressing hope that China would recognize that “the days of ripping off the U.S.A. and other countries” were no longer sustainable.
The president also indicated that tariffs on other nations—except for specific industries like steel and aluminum—would drop to the 10% baseline rate, marking a dramatic shift from the previously proposed steep levies, some reaching as high as 50%.
Relief for Global Markets
The sudden announcement caused a sharp rally in global stock markets. The S&P 500 surged 9.5%, and the Dow Jones Industrial Average climbed nearly 3,000 points, a gain of 7.87%. Investors cheered the temporary retreat from the brink of an all-out trade war, reflecting the market’s desire for certainty in the trade environment.
A notable aspect of Trump’s decision was the timing: after a tumultuous period of heightened tariffs that had created significant market volatility, the president responded to growing concerns over economic consequences. His reversal, though, was met with mixed reactions as many analysts warned that the unpredictability of his trade policy could continue to undermine investor confidence in the long term.
China: Escalating Tensions and Retaliation
While Trump has paused most of the tariffs, the situation with China remains particularly contentious. The U.S. administration’s latest move to increase tariffs on Chinese imports came in direct response to China’s announcement of retaliatory tariffs against American goods. Beijing imposed retaliatory tariffs as high as 84% on U.S. products, set to take effect soon after Trump’s announcement.
This marks a continuation of the trade war between the two economic giants, which has already resulted in economic slowdowns in both countries. Analysts believe that China, led by President Xi Jinping, will resist U.S. pressure, especially as Beijing seeks to protect its domestic industries from foreign trade policies. Wendong Zhang, an expert in applied economics at Cornell University, warned that China has “vowed to fight to the end,” with little indication that the economic pressures will break the resolve of the Chinese leadership.
EU pauses retaliatory tariffs following Trump’s announcement
In a parallel move, the European Union also paused its retaliatory tariffs on U.S. imports. European Commission President Ursula von der Leyen confirmed that the EU would temporarily halt countermeasures, giving room for negotiations. The EU had previously imposed 25% tariffs on U.S. steel and aluminum exports and 20% levies on other goods, as a direct response to U.S. trade actions.
Von der Leyen emphasized that the pause would be contingent on the outcome of ongoing talks, and if no meaningful agreements are reached, the EU would resume its retaliatory measures. “We want to give negotiations a chance,” she stated, but also cautioned that instability in the global trade landscape could continue to affect economic growth.
Impact of Trump’s Tariff Strategy: Short-Term Relief, Long-Term Concerns
While the immediate impact of Trump’s tariff pause has been seen as a relief to investors, it is unlikely to resolve the broader economic uncertainties posed by his aggressive trade policies. Economists have warned that while the pause offers temporary respite, the global economy could still face long-term repercussions from Trump’s erratic approach to trade. The heightened tensions with China, in particular, are expected to exacerbate global economic slowdowns, especially as both nations account for nearly half of the global economic output.
Joe Brusuelas, chief economist at RSM US, predicted that the U.S. economy could still face a recession in the near future. “The economy is still likely to fall into recession, given the level of simultaneous shocks that it’s absorbed,” Brusuelas said, pointing to the risks posed by the tariff-heavy environment.
What the pause means for Global Trade
The 90-day pause signals a temporary de-escalation in what had become an expansive and unpredictable U.S. tariff campaign. While markets responded positively, the decision offers only limited relief for global trade partners. The baseline 10% tariff still applies to most nations, effectively resetting the U.S. approach to a more protectionist default. The sharp increase in tariffs on China—from 104% to 125%—also cements an aggressive posture in U.S.-China relations, likely escalating an already intense trade conflict.
For many economies, particularly developing nations and key U.S. allies, the pause buys time but does little to restore pre-tariff trade norms. Exporters must still navigate a fragmented landscape of exemptions, sector-specific duties, and potential reversals. Economists warn that this volatility—and the lack of long-term clarity—may suppress investment, slow supply chains, and undermine the rules-based international trade system.
What lies ahead?
The announcement of a 90-day pause in reciprocal tariffs marks a critical juncture for global trade, but it does little to resolve the underlying tensions between the U.S. and its trading partners, particularly China. While markets have reacted positively in the short term, the long-term consequences of Trump’s tariff strategy remain uncertain.
Many nations, including Vietnam, Sri Lanka, and several European countries, will face the new 10% baseline tariff rate. Meanwhile, U.S. allies with existing trade agreements, such as South Korea and Australia, will no longer benefit from their zero-tariff status.
As Trump continues to navigate trade talks, experts warn that the unpredictability of U.S. trade policies will create ongoing instability in the global economy. The absence of clear, long-term strategies leaves businesses and governments in a constant state of flux, unable to fully plan for the future.