WASHINGTON: Facing a global market meltdown, President Donald Trump on Wednesday abruptly backed down on his tariffs on most nations for 90 days, but raised the tax rate on Chinese imports to 125 percent.
It was seemingly an attempt to narrow what had been an unprecedented trade war between the US and most of the world to a showdown between the US and China. The S&P 500 stock index jumped nearly 7 percent after the announcement, but the precise details of Trump’s plans to ease tariffs on non-China trade partners were not immediately clear.
Trump posted on Truth Social that because “more than 75 Countries” had reached out to the US government for trade talks and have not retaliated in meaningful way “I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10 percent, also effective immediately.”
The 10 percent tariff was the baseline rate for most nations that went into effect on Saturday. It’s meaningfully lower than the 20 percent tariff that Trump had set for goods from the European Union, 24 percent on imports from Japan and 25 percent on products from South Korea. Still, 10 percent would represent an increase in the tariffs previously charged by the US government.
The announcement came after the global economy appeared to be in open rebellion against Trump’s tariffs as they took effect Wednesday, a signal that the US president was not immune from market pressures.
Business executives were warning of a potential recession caused by his policies, some of the top US trading partners are retaliating with their own import taxes and the stock market is quivering after days of decline.
White House press secretary Karoline Leavitt said the walk back was part of some grand negotiating strategy by Trump.
“President Trump created maximum negotiating leverage for himself,” she said, adding that the news media “clearly failed to see what President Trump is doing here. You tried to say that the rest of the world would be moved closer to China, when in fact, we’ve seen the opposite effect the entire world is calling the United States of America, not China, because they need our markets.”
But market pressures had been building for weeks ahead of Trump’s move.
Particularly worrisome was that US government debt had lost some of its luster with investors, who usually treat Treasury notes as a safe haven when there’s economic turbulence. Government bond prices had been falling, pushing up the interest rate on the 10-year US Treasury note to 4.45 percent. That rate eased after Trump’s reversal.
Gennadiy Goldberg, head of US rates strategy at TD Securities, said before the announcement that markets wanted to see a truce in the trade disputes.
“Markets more broadly, not just the Treasury market, are looking for signs that a trade de-escalation is coming,” he said. “Absent any de-escalation, it’s going to be difficult for markets to stabilize.”
John Canavan, lead analyst at the consultancy Oxford Economics, noted that while Trump said he changed course due to possible negotiations, he had previously indicated that the tariffs would stay in place.
“There have been very mixed messages on whether there would be negotiations,” Canavan said. “Given what’s been going on with the markets, he realized the safest thing to do is negotiate and put things on pause.”
Presidents often receive undue credit or blame for the state of the US economy as their time in the White House is subject to financial and geopolitical forces beyond their direct control.
But by unilaterally imposing tariffs, Trump is exerting extraordinary influence over the flow of commerce, creating political risks and pulling the market in different directions based on his remarks and social media posts. There still appear to be 25 percent tariffs on autos, steel and aluminum, with more imports set to be tariffed in the weeks ahead.
On CNBC, Delta Air Lines CEO Ed Bastian said the administration was being less strategic than it was during Trump’s first term. His company had in January projected it would have its best financial year in history, only to scrap its expectations for 2025 due to the economic uncertainty.
“Trying to do it all at the same time has created chaos in terms of being able to make plans,” he said, noting that demand for air travel has weakened.
Before Trump’s reversal, economic forecasters say his second term has had a series of negative and cascading impacts that could put the country into a downturn.
“Simultaneous shocks to consumer sentiment, corporate confidence, trade, financial markets as well as to prices, new orders and the labor market will tip the economy into recession in the current quarter,” said Joe Brusuelas, chief economist at the consultancy RSM.
Treasury Secretary Scott Bessent has previously said it could take months to strike deals with countries on tariff rates, and the administration has not been clear on whether the baseline 10 percent tariffs imposed on most countries will stay in place. But in an appearance on “Mornings with Maria,” Bessent said the economy would “be back to firing on all cylinders” at a point in the “not too distant future.”
He said there has been an “overwhelming” response by “the countries who want to come and sit at the table rather than escalate.” Bessent mentioned Japan, South Korea, and India. “I will note that they are all around China. We have Vietnam coming today,” he said.
What’s not yet known is what Trump does with the rest of his tariff agenda. In a Tuesday night speech, he said taxes on imported drugs would happen soon.

KYIV: China on Wednesday rejected Ukrainian President Volodymyr Zelensky’s claim that many Chinese citizens were fighting for Russia, calling it “absolutely groundless.”
Zelensky said Tuesday that Kyiv had captured two Chinese citizens fighting alongside Russian forces, and that there was evidence “many more Chinese citizens” were fighting with Moscow.
Chinese foreign ministry spokesman Lin Jian told a press conference it was “absolutely groundless” to suggest many Chinese citizens were fighting in Ukraine.
“The Chinese government has always asked its citizens to stay away from areas of armed conflict (and) avoid involvement in armed conflicts in any form,” he said.
He added that Beijing was verifying relevant information with Kyiv.
The Kremlin declined to comment on the matter.
China presents itself as a neutral party in the conflict and says it is not sending lethal assistance to either side, unlike the United States and other Western nations.
But it is a close political and economic partner of Russia, and NATO members have branded Beijing a “decisive enabler” of Moscow’s offensive, which it has never condemned.
“The Chinese side’s position on the issue of the Ukraine crisis is clear and unequivocal, and has won widespread approval from the international community,” Lin said.
“The Ukrainian side should correctly view China’s efforts and constructive role in pushing for a political resolution to the Ukraine crisis.”
Zelensky told reporters on Tuesday that Ukrainian troops had captured the two Chinese citizens fighting with Russian forces in the Donetsk region.
The media outlet Ukrainska Pravda, citing the Ukrainian army, reported that one of the captives had paid $3,480 to an intermediary in China to join the Russian army because he wanted to receive Russian citizenship.
The captive, who is now cooperating with the Ukrainian authorities, also said he was trained in the Russian-occupied Lugansk region as part of a group of Chinese nationals, some of whom had legal issues back home, according to Ukrainska Pravda.
Kyiv released a video of one of the alleged Chinese prisoners showing a man wearing military fatigues with his hands bound.
He mimicked sounds from combat and uttered several words in Mandarin during an apparent interview with a Ukrainian official not pictured.
A senior Ukrainian official told AFP they were captured “a few days ago,” adding that there might be more of them.
The official said the prisoners were likely Chinese citizens who were enticed into signing a contract with the Russian army, rather than being sent by Beijing.