(Image source from: x.com/WhiteHouse)
On Wednesday, US President Donald Trump declared a temporary suspension of his extensive tariffs on all nations, with the exception of China—a decision that seemed highly unlikely just one day prior. Trump, who had implemented a series of tariffs to tackle what he perceived as a trade disparity with the United States, noted that negotiations with over 75 countries had proceeded without retaliation against him, prompting this pause. He announced that throughout the next 90 days, a lowered reciprocal tariff of merely 10 percent would apply. However, for China, Trump revealed an immediate hike in tariffs to 125 percent, an increase from the previously established rate of 104 percent. On Truth Social, he stated, "Due to the disrespect China has shown towards global markets, I am increasing the tariff imposed by the United States on China to 125%, effective immediately. At some future point, I hope China will recognize that the era of taking advantage of the US and other nations is no longer viable or permissible."
He continued, "China is eager to negotiate a deal. They are just unsure about how to approach it... President Xi Jinping is quite prideful. They are figuring it out, but they will eventually." For several days, Republican colleagues and business leaders had been urging the President to halt the tariffs, worried about the potential onset of a significant trade conflict that could spark a worldwide market crisis and raise fears of an impending global recession. Yet, he remained steadfast, asserting that "My policies will never change." By Wednesday, the consensus that swayed Trump to reconsider his tariff implementation had finally become apparent, but the increasing alarm from the Treasury Department regarding the state of the bond market was what ultimately led him to pause his reciprocal tariff strategies, according to CNN. The report highlighted that US Treasury Secretary Scott Bessent had shared his concerns with Trump while White House economic advisors updated him on the rapid sell-off occurring in the US Treasury market.
As Trump spoke to reporters following his announcement on the tariff pause, it became evident that the choice was more spontaneous than part of a deliberate plan. "The bond market is quite unpredictable; I was observing it closely. Right now, the bond market looks excellent. However, I noticed last night that some individuals were becoming anxious. We didn’t have legal counsel available, and the decision was just drafted. It was heartfelt, wasn't it? It was crafted with care, and I believe it was well articulated, too. I sensed that people were perhaps overreacting... They were getting a bit frantic, you know, feeling a bit nervous. Flexibility is necessary," he remarked.
On Wednesday, stocks on Wall Street experienced a dramatic rise following President Trump's unexpected decision to suspend several new tariffs. This development provided a significant boost to a stock market that had suffered from consecutive days of declines fueled by increasing fears of a recession. Almost immediately after the news broke, the Dow jumped approximately 2,500 points, achieving nearly an eight percent increase for the day. Meanwhile, the technology-heavy Nasdaq soared 12.2 percent, marking its most significant single-day gain in 24 years, and the S&P 500 rose by 6.0 percent to reach 5,281.44 points. Additionally, oil prices saw an increase of over four percent, and the dollar gained strength as well.
Since President Trump enacted a 26 percent tariff on imports from India, Indian markets have struggled. However, the announcement of a 90-day suspension offers some relief, giving New Delhi additional time to negotiate with the United States. Randhir Jaiswal, the spokesperson for the Ministry of External Affairs, stated on Wednesday that both countries are in discussions regarding reciprocal tariffs as they work towards a swift conclusion of a mutually advantageous multi-sectoral bilateral trade agreement.
"India and the United States enjoy a robust partnership concerning trade, economy, investment, and commerce, and we are optimistic that these ties will continue to grow and strengthen. Regarding trade challenges, we are engaged in negotiations for a bilateral trade agreement, and we are hopeful about resolving these matters and finalizing the agreement promptly," he mentioned.
