Trump Pauses Tariffs for 90 Days. Except China

The Tariff Avalanche

Trump’s latest tariff measures, which took effect on “Liberation Day” (April 2), marked his most comprehensive round yet. These new tariffs apply a baseline 10% duty on nearly all goods imported into the United States. Steeper tariffs, reaching up to 50%, were imposed on countries with substantial trade surpluses with the U.S., such as Vietnam (46%), Taiwan (32%), Japan (24%), South Korea (25%), and the European Union (20%). Even small economies like Lesotho weren’t spared, facing a staggering 50% rate.

Particularly severe were the tariffs on Chinese goods, totaling 104% after a series of increases. Trump initially announced a 34% hike on China, followed by an additional 50% in retaliation for Beijing’s expected response.

China’s Fierce Countermove

In retaliation, China escalated the conflict by imposing an 84% tariff on American goods. Citing American hostility and economic aggression, China’s Ministry of Commerce warned that it would “fight to the end” if necessary. The Chinese government also began restricting business with eleven U.S. companies and re-opened a legal challenge at the World Trade Organization.

The trade balance between the U.S. and China remains a contentious issue. While the U.S. exported a record $199 billion to China last year, China still exported $463 billion to the U.S., though it is no longer America’s top import source — Mexico and Canada now lead.

More Tariffs on the Horizon

Trump has shown no signs of slowing down. During a speech, he teased a new tariff on pharmaceuticals, criticizing the U.S. dependency on foreign drug production. He has also previously targeted industries like copper, lumber, and steel, signaling more product-specific levies to come.

In addition, Trump’s 25% tariffs on auto imports took effect, with further expansions on parts expected in early May. Canada responded by imposing its own 25% tariff on U.S. auto imports not compliant with the USMCA.

Steel and aluminum tariffs were also raised in March, with both now taxed at 25% — an increase from Trump’s 2018 levels. While Canada and Mexico were spared some of the latest hikes, goods not compliant with USMCA standards still face heavy duties.

EU and Global Reactions

The European Union also announced retaliatory tariffs on $23 billion in U.S. goods in response to earlier steel and aluminum duties. These countermeasures will roll out in stages, starting in April and continuing through December. EU officials criticized Trump’s actions as “unjustified and damaging,” while offering a potential compromise: a zero-for-zero tariff deal on industrial goods — which Trump dismissed as inadequate.

Market Response: Panic and Euphoria

Markets have been on a roller coaster amid this tariff turmoil. On Wednesday, April 9, after Trump announced a 90-day pause on most of the new tariffs — excluding China — the S&P 500 surged 7.8%, and the Dow Jones jumped 2,476 points. The Nasdaq soared 9%, marking one of the biggest single-day gains in years.

Investors welcomed Trump’s partial retreat, but uncertainty remains high. Massive market swings have become common, driven by fears of inflation, recession, and deteriorating international relations. Treasury yields, a traditional safe haven, have fluctuated wildly, signaling increased investor stress.

Despite the pause, Trump doubled down on China, raising tariffs to 125%, framing it as a response to “disrespect.” The Chinese government responded by ramping up its anti-U.S. rhetoric, issuing a travel advisory, and accusing the U.S. of reneging on trade promises, such as avoiding forced technology transfers.

Outlook: No End in Sight

This renewed trade war marks a sharp return to Trump’s hardline stance from his first term, overturning years of diplomatic and economic gains. Economists warn of rising prices, global supply chain disruptions, and the risk of recession, particularly if the tit-for-tat escalations continue.

While some countries seek negotiated solutions, Trump’s administration appears intent on using tariffs as leverage to remake global trade. Meanwhile, China has abandoned a conciliatory tone and positioned itself for long-term economic resistance, refusing to back down under American pressure.

With a volatile mix of nationalism, retaliation, and political posturing, the global economy finds itself on uncertain footing, held hostage by an intensifying U.S.-led tariff war.