Explained: The current tariff rate and the reason behind Trump's 90-day pause

In the last few days, the US President has been under a lot of pressure from investors and business leaders to reduce or remove tariffs.

US President Donald Trump in a dramatic U-turn on April 9 announced a 90-day reprieve from higher tariffs for over 75 countries even as he doubled down on his attack against China, providing a massive boost to global stock markets.

“I have authorised a 90-day PAUSE, and a substantially lowered reciprocal tariff during this period, of 10 percent, also effective immediately,” Trump said.

Trump's about-face came around 13 hours after high duties on 56 nations and the European Union took effect, fuelling market turmoil and stoking recession fears.

So, what is the current tariff rate?

Trump had announced on “Liberation Day” (April 3) that he will be imposing tariffs, effective from April 9, on countries that are engaged in “unfair trade practices” and have big deficits with the US.

The duties announced were in addition to a baseline reciprocal tariff of 10 percent on all the goods coming into the US. Trump has not removed this 10 percent tariff rate and it will be applicable for all the goods imported into the US.

Catch all the latest developments related to Trump's tariff drama

What about China

The US President had earlier imposed a tariff of 20 percent on Chinese goods, which was topped up with an additional 34 percent on April 3. Later, Beijing responded with its own 34 percent duty on American goods. In response, Trump announced another 50 percent tariff to take it to 84 percent and later to 104 percent. On April 9, Trump, while announcing a pause, announced a 125 percent tariff on the world’s second-largest economy. Currently, China’s tariff on US goods stands at 84 percent.

Billionaires score best-ever day as stocks soar on tariff pause

Are there any more tariffs and exceptions?

These tariffs announced by the US are in addition to separate rates for steel, aluminum and auto imports. Tariffs of 10 percent or 25 percent on Canadian and Mexican goods, with the exception items covered by the North American trade pact, will also stay the same, the official said.

The pharma sector is unlikely to get any relief as Trump reiterated on Wednesday his intention to move forward with tariffs on drug imports.

Why were tariffs put on hold?

In the last few days, the US President has been under a lot of pressure from investors and business leaders to reduce or remove tariffs.

Trump said he thought about paring back his tariffs “over the last few days” in discussions with Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, and the decision “probably came together early this morning.”

Magnificent Seven rides again as Trump pauses tariffs; adds $1.5 trillion in value

“I thought that people were jumping a little bit out of line,” Trump told reporters at the White House on Wednesday when asked why he backed off. “They were getting a little bit yippy, a little bit afraid.”

Who all are in the exemption list?

Trump said that over 75 countries have contacted his administration and have “not retaliated” on his “strong suggestion”, which is why he took the decision to halt the tariffs.

Bessent on Wednesday couched the turnabout as a victory for Trump, telling reporters the president “created maximum negotiating leverage for himself” in talks with other nations. He said he would be speaking to officials from Vietnam, Japan, India and South Korea in the coming days.

However, it is not yet clear which nations are in the tariff exemption list. Reports have indicated that India, termed by Trump as a “tariff abuser” is exempted from higher duties. New Delhi has been engaged with Washington for a bilateral trade agreement for the past few weeks.

How the stocks have reacted

Stocks staged their best rally since 2008 as euphoria gripped markets after Trump’s abrupt announcement. The S&P 500 Index soared 9.5 percent, rebounding from bear-market territory. The tech-heavy Nasdaq 100 surged 12 percent. Goldman Sachs Group Inc. economists rescinded their forecast for a US recession. Asian stocks too posted their biggest jump in more than two years, while Chinese shares advanced in the hopes of more stimulus.

With inputs from Bloomberg