President Donald Trump announced that “reciprocal” tariffs would be paused for 90 days, while maintaining the 10% tariffs that were already in place. This announcement led to a significant rebound in the markets on Wednesday afternoon. The announcement was made on Trump’s social media platform, Truth Social, where he stated that China’s tariffs would increase from 104% to 125%, effective immediately. Trump justified the increase by citing a perceived lack of respect from China towards global markets, stating that such behavior was no longer sustainable or acceptable.
Trump further elaborated that representatives from 75 countries have been in negotiations regarding tariffs, trade barriers, currency manipulation, and non-monetary tariffs. However, it remains unclear how nations like Australia, which imports more from the U.S. than it exports, could negotiate a trade deficit as it did not have tariffs against the U.S. Trump credited these countries for not retaliating against the U.S., and as a result, has authorized a 90-day pause with a reduced reciprocal tariff of 10% during this period.
The status of tariffs against the European Union remains uncertain, especially in light of the EU’s announcement of a 25% retaliatory tariff. Additionally, there is no clarity on what will transpire after the 90-day period.
Treasury Secretary Scott Bessent claimed victory at a press conference outside the White House following Trump’s announcement, asserting that the President had successfully brought countries to the negotiating table using “maximum negotiating leverage.” Despite this assertion, it remains unclear what tangible changes have occurred, as many countries seem frustrated with the erratic nature of Trump’s tariff policies.
Trump initially revealed his controversial tariff plan on April 2, presenting a chart that purportedly demonstrated the “tariffs” each country imposed on the U.S. However, these figures were derived by calculating the trade deficit divided by exports, not actual tariffs. Many countries have expressed frustration with Trump’s tactics, noting that the U.S. is attempting to dismantle a system it once built. The long-term outlook suggests that countries may seek alternatives to trading with the U.S.
During the press conference, Bessent was questioned about the potential conclusion of the disputes. He indicated that the U.S. intends to negotiate in good faith and expressed hope that its allies would do the same.