Trump pauses global tariffs—but doubles down on China

Trump pauses global tariffs except China

US President Donald Trump on Wednesday announced a 90-day pause on his sweeping “reciprocal tariff” regime, backing away from duties that had triggered panic across global markets and rare backlash from Republican allies and major business donors. The decision sparked immediate relief on Wall Street but came with a sharp caveat: tariffs on China were increased from 104% to 125%, signalling a deepening trade standoff with Beijing, the Financial Times reported.

The move represents another sharp turn in a chaotic rollout of trade policy since Trump’s second inauguration. Just last week, the White House had introduced high tariffs on imports from nearly all major trading partners, with only a few sectors exempt.

Market fallout forces policy reversal

The abrupt pause followed a steep global sell-off in equities and US Treasuries. Trump acknowledged the turmoil, saying people were getting “yippy” and emphasising the need for “flexibility.” His comments came as his top trade negotiator, Jamieson Greer, testified before Congress and was publicly challenged by lawmakers over the administration’s coherence on trade policy.

Behind the scenes, Republican lawmakers and billionaire donors—including some of Trump’s core backers—had raised alarms about the sweeping levies, which they feared would destabilise the economy.

What tariffs remain in place?

While most reciprocal tariffs have been paused, several key duties remain. A 10% baseline tariff now applies to imports from all countries—including the EU—with exemptions for chips, copper, lumber, pharmaceuticals, bullion, energy, and minerals not sourced domestically.

Automobiles and auto parts are still subject to a separate 25% tariff introduced last month. Similarly, steel and aluminium imports continue to carry a 25% duty, and ongoing investigations could result in new tariffs on copper and lumber.

Mexico and Canada, initially spared, now face 25% tariffs on imports that do not comply with the terms of the USMCA agreement.

China left out of tariff pause

While Trump eased tariffs on dozens of countries, he doubled tariffs on Chinese goods following fresh retaliatory duties imposed by Beijing. Treasury Secretary Scott Bessent pointed to China’s retaliation as the trigger. “Do not retaliate, and you will be rewarded,” Bessent said, repeating the administration’s ultimatum to global partners.

Unlike other nations, China has not opened formal talks with the US to de-escalate the situation. Trump has hinted that President Xi Jinping may eventually agree to a dialogue, but Beijing has publicly dismissed the tariffs as coercive and politically motivated.

Trade talks and tariff uncertainty loom large

More than 70 countries are reportedly in line to strike individual deals with Washington to avoid the return of steep tariffs after the 90-day pause. Analysts suggest that to manage this complex web of negotiations, the administration may pivot from blanket country-wide tariffs to more targeted, product-specific levies.

Former UK trade official Allie Renison observed that shifting to sectoral tariffs could be more practical and politically palatable, especially for manufacturers seeking consistency.

Global trade tensions far from over

Despite the temporary reprieve, economists and investors warn that the damage from Trump’s erratic tariff strategy may already be done. Corporations remain reluctant to adjust supply chains in a climate of unpredictability. Nicolò Tamberi of the Centre for Inclusive Trade Policy noted that uncertainty itself can depress investment as severely as tariffs do.

“Even if Trump does deals to avoid tariffs’ impacts today, maybe he will change his mind tomorrow,” Tamberi said.

Steven Abrahams, head of strategy at Santander US Capital Markets, echoed the sentiment, saying many investors would adopt a cautious wait-and-see approach. “We’ve seen ‘liberation day’ one,” he said. “But without clarity, many will wait for ‘liberation day’ two.”