In a surprising turn of events, President Trump announced a 90-day pause on newly imposed tariffs, a move that came just hours after they took effect. This abrupt reversal, driven by market turmoil and pressure from business leaders, sent global stocks soaring and sparked intense debate about the administration's trade strategy.
In a dramatic shift that sent global markets soaring, US President Donald Trump announced a 90-day pause on newly imposed tariffs, a move that came just hours after the duties took effect. This abrupt reversal, announced on April 9th, has sparked widespread discussion about the pressures influencing the president’s decision and the implications for international trade.
Just days after declaring “Liberation Day” on April 3rd, signaling the imposition of tariffs on nations deemed to have “unfair trade practices,” Trump reversed course. The initial plan, which added to an existing 10% baseline tariff on all imports, was met with immediate market volatility and growing recession fears. Trump’s announcement of a 90-day pause, accompanied by a lowered reciprocal tariff of 10%, aimed to alleviate this anxiety.
“I have authorized a 90-day PAUSE, and a substantially lowered reciprocal tariff during this period, of 10 percent, also effective immediately,” Trump stated, attempting to reassure investors.
While extending a pause to over 75 countries, Trump intensified his stance against China. The escalating tariff war with China has seen duties climb to 125% on Chinese goods. While China’s tariffs on US goods stand at 84%. This ongoing trade dispute remains a key point of contention.
The president’s decision came amidst mounting pressure from business leaders and investors, coupled with significant turmoil in the bond market. Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick reportedly played crucial roles in influencing Trump’s decision.
“They were getting a little bit yippy, a little afraid,” Trump remarked, acknowledging the growing concern.
The sharp sell-off in US government bonds, a traditionally stable market, raised alarms within the Treasury Department. Bessent highlighted the president’s “successful negotiating strategy,” suggesting the pause was a tactical move to gain leverage.
While the exact list of exempted countries remains somewhat opaque, reports indicate India, despite being labeled a “tariff abuser” by Trump, is among those receiving relief. Bessent mentioned upcoming talks with officials from Vietnam, Japan, India, and South Korea, indicating ongoing negotiations.
The announcement triggered a massive market rally. The S&P 500 surged 9.5%, the Dow Jones Industrial Average rose 7.9%, and the Nasdaq Composite jumped 12.2%, marking its largest single-day percentage gain since January 2001. This market surge reflected a wave of optimism, with Goldman Sachs Group Inc. economists even retracting their recession forecast.
Trump, alongside Bessent and Lutnick, personally drafted the announcement. “We wrote it up from our hearts,” he explained, emphasizing the impromptu nature of the decision. This spontaneity, while welcomed by markets, also raised questions about the administration’s strategic planning.
Despite the positive market reaction, uncertainty lingers. Trump’s suggestion of granting tariff exemptions based on “instinct” rather than strategy has added to the ambiguity. The pharmaceutical sector, for example, is unlikely to receive any relief, as Trump reiterated his intention to proceed with tariffs on drug imports.
This swift reversal underscores the delicate balance between trade policy, economic pressures, and market stability, leaving many to question the long-term trajectory of US trade relations.
Leave a Reply