President Donald Trump announced a complete three-month pause on all the “reciprocal” tariffs that went into effect at midnight, with the exception of China, a stunning reversal from a president who had insisted historically high tariffs were here to stay.
But enormous tariffs will remain on China, the world’s second-largest economy. In fact, Trump said they will be increased to 125% from 104% after China announced additional retaliatory tariffs against the United States earlier Wednesday. All other countries that were subjected to reciprocal tariff rates Wednesday will see rates go back down to the universal 10% rate, he said.
“Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately,” Trump said in his social media post. “At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable,” he wrote.
Speaking to reporters after the announcement, Trump said, “Nothing’s over yet, but we have a tremendous amount of spirit from other countries, including China. China wants to make a deal, they just don’t know how quite to go about it.”
Mexico and Canada won’t face the 10% tariffs, a White House official told CNN. Almost every good coming from the two nations will continue to be tariffed at 25%, unless they are compliant with the US-Mexico-Canada Agreement, in which case they won’t face tariffs. However, that does not apply to sector-specific tariffs Trump has imposed.
Wall Street breathed a sigh of relief, however, that Trump was backing down on other extreme trade measures. Stocks rallied sharply on the news – even though the 10% universal tariff on all imports coming into the United States remained in effect.
The Dow surged nearly 3,000 points or 7.87%, on Wednesday. The S&P 500 shot up 9.5%. The tech-heavy Nasdaq soared 12.2%. This marked the best day for the S&P 500 since October 2008. The Nasdaq posted its best day since January 2001 and its second-best day on record. While the Dow posted its best day in five years.
This comes after markets have been getting slammed by the prospect of the significantly higher tariffs Trump laid out last week.
Hours before making the announcement, Trump said “THIS IS A GREAT TIME TO BUY!!!”
He concluded the post with “DJT,” potentially a nod to Trump Media & Technology Group Corp, which trades under the ticker “DJT.” At the time, the parent of Truth Social, DJT shares were down nearly 13% this month. After the announcement, shares were up over 20% for Wednesday alone.
Trump told reporters his decision to move forward with the pause was in part influenced by people “getting a little yippy yappy.”
“You have to have flexibility,” he added, a stark about-face from recent comments he and administration officials have made recently insisting Trump was not going to back off his promises.
(CNN)
