Trump pauses tariffs; treasury chief Bessent: ‘This was his strategy all along’

Trump Tariff, Donald Trump, Scott Bessent, China, U.S. imports.

In a major turnaround, President Donald Trump said he will temporarily lower the high tariffs he recently put on many countries — but not on China. Treasury Secretary Scott Bessent said the tariffs were always meant as a smart negotiating move, and the 90-day pause is part of that plan to bring other countries to the table while keeping pressure on China.

Trump’s reversal on Wednesday came less than a day after new tariffs had taken effect on most U.S. trading partners. The announcement followed a period of severe financial market turmoil, the most intense since the early stages of the COVID-19 pandemic, which wiped out trillions in market value and triggered a sharp rise in U.S. government bond yields — developments that appeared to catch the president’s eye.

"I thought that people were jumping a little bit out of line, they were getting yippy, you know," Trump said to reporters following the announcement, using a golf expression to describe the reaction.

Since reclaiming the presidency in January, Trump has repeatedly issued threats of harsh trade penalties against global partners, often reversing those decisions at the last moment. This unpredictable, back-and-forth approach has left international leaders puzzled and created anxiety among business leaders, many of whom say the constant policy swings have made economic planning and forecasting increasingly challenging.

The day's events cast into stark relief the uncertainty surrounding Trump's policies and how he and his team create and implement them.

U.S. Treasury Secretary Scott Bessent asserted that the pullback had been the plan all along to bring countries to the bargaining table. Trump, though, later indicated that the near-panic in markets that had unfolded since his April 2 announcements had factored in to his thinking.

Despite insisting for days that his policies would never change, he told reporters on Wednesday: "You have to be flexible."

But he kept the pressure on China, the No. 2 provider of U.S. imports. Trump said he would raise the tariff on Chinese imports to 125% from the 104% level that took effect at midnight, further escalating a high-stakes confrontation between the world's two largest economies. The two countries have traded tit-for-tat tariff hikes repeatedly over the past week.

Trump's reversal on the country-specific tariffs is not absolute. A 10% blanket duty on almost all U.S. imports will remain in effect, the White House said. The announcement also does not appear to affect duties on autos, steel and aluminum that are already in place.

The 90-day freeze also does not apply to duties paid by Canada and Mexico, because their goods are still subject to 25% fentanyl-related tariffs if they do not comply with the U.S.-Mexico-Canada trade agreement's rules of origin. Those duties remain in place for the moment, with an indefinite exemption for USMCA-compliant goods.

"China is unlikely to change its strategy: stand firm, absorb pressure, and let Trump overplay his hand. Beijing believes Trump sees concessions as a weakness, so giving ground only invites more pressure," said Daniel Russel, vice president of international security and diplomacy at the Asia Society Policy Institute.

"Other countries will welcome the 90-day stay of execution — if it lasts — but the whiplash from constant zigzags creates more of the uncertainty that businesses and governments hate," Russel said.

U.S. stock indexes shot higher on the news, with the benchmark S&P 500 index closing 9.5% higher. Bond yields came off earlier highs and the dollar rebounded against safe-haven currencies.

The relief spread through Asian markets as they opened on Thursday with Japan's Nikkei index surging almost 9%.

Trump's tariffs had sparked a days-long selloff that erased trillions of dollars from global stocks and pressured U.S. Treasury bonds and the dollar, which form the backbone of the global financial system. Canada and Japan said they would step in to provide stability if needed - a task usually performed by the United States during times of economic crisis.

Analysts said the sudden spike in share prices might not undo all of the damage. Surveys have found slowing business investment and household spending due to worries about the impact of the tariffs, and a Reuters/Ipsos survey found that three out of four Americans expect prices to increase in the months ahead.

Goldman Sachs cut its probability of a recession back to 45% after Trump's move, down from 65%, saying the tariffs left in place were still likely to result in a 15% increase in the overall tariff rate.

Treasury Secretary Bessent shrugged off questions about market turmoil and said the abrupt reversal rewarded countries that had heeded Trump's advice to refrain from retaliation. He suggested Trump had used the tariffs to create maximum negotiating leverage. "This was his strategy all along," Bessent told reporters. “And you might even say that he goaded China into a bad position."

Bessent is the point person in the country-by-country negotiations that could address foreign aid and military cooperation as well as economic matters. Trump has spoken with leaders of Japan and South Korea, and a delegation from Vietnam met with U.S. officials on Wednesday to discuss trade matters, the White House said.

Bessent declined to say how long negotiations with the more than 75 countries that have reached out might take.

Trump said a resolution with China was possible as well. But officials have said they will prioritize talks with other countries.

"China wants to make a deal," Trump said. "They just don't know how quite to go about it."
Trump told reporters that he had been considering a pause for several days. On Monday, the White House denounced a report that the administration was considering such a move, calling it "fake news."

Earlier on Wednesday, before the announcement, Trump tried to reassure investors, posting on his Truth Social account, "BE COOL! Everything is going to work out well. The USA will be bigger and better than ever before!"

Later, he added: "THIS IS A GREAT TIME TO BUY!!!"

(With Reuters Input)