US President Donald Trump’s abrupt decision to implement a 90-day pause on the tariffs he imposed on dozens of countries has sent battered stock markets surging, even as he ratcheted up his trade war with China.
Trump’s turnaround on Wednesday, which came just 13 hours after the duties had gone into effect, followed the most intense episode of financial market volatility since the COVID-19 pandemic.
US President Donald Trump’s abrupt decision to implement a 90-day pause on the tariffs he imposed on dozens of countries has sent battered stock markets surging, even as he ratcheted up his trade war with China.
Trump’s turnaround on Wednesday, which came just 13 hours after the duties had gone into effect, followed the most intense episode of financial market volatility since the COVID-19 pandemic.
H1: What are Trump's latest moves?
On Wednesday, Trump announced a 90-day pause on “reciprocal” tariffs for almost 60 countries and the European Union. The tariffs were customised for each country and corresponded to the size of their trade surplus with the US.
mports from those countries will now be subject to a flat tax of 10 percent, which Trump introduced on April 5. China was not included in the pause.
Instead, Trump announced that he would raise levies on Chinese goods to 125 percent, from 104 percent. Trump’s decision came after Beijing announced plans to retaliate with an 84 percent duty on American goods on Wednesday.
World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala has said the tensions “pose a significant risk of a sharp contraction in bilateral trade” between the US and China.
“Our preliminary projections suggest that merchandise trade between these two economies could decrease by as much as 80 percent,” she said in a statement on April 9.
H2: What did Trump actually say?
At a White House event celebrating Joey Logano, the NASCAR Cup Series Champion, Trump claimed his method for assigning and adjusting tariffs was based on “more of an instinct than anything else”.
What is the state of US-China trade relations?
Despite growing tensions between the US and China, Washington and Beijing remain major trade partners.
According to data from the Office of the United States Trade Representative, the total goods trade between the US and China stood at an estimated $582.4bn in 2024. US goods exports to China totalled $143.5bn. On the other hand, US goods imports from China totalled $438.9bn. The upshot is that America’s trade deficit with China was $295.4bn last year, marking a 5.8 percent rise ($16.3bn) over 2023.
China is the US’s third-largest trade partner, after Mexico and Canada. But the US has been slowly weaning itself off Chinese imports.
Chinese goods accounted for 13.3 percent of US imports in 2024, down from a peak of 21.6 percent in 2017.
Still, from washing machines and TV sets to clothing, China is one of the top suppliers of goods to the US.
The US Department of Commerce calculated that mechanical appliances (mainly low to mid-range technology products) made up 46.4 percent of all US imports from China in 2022.
H3: In what ways could the US benefit?
Trump has long maintained that tariffs can reduce America’s trade deficits and bring foreign manufacturing back to the US. He has also said they will pave the way for future tax cuts.
In 1979, nearly 20 million Americans made their living from manufacturing. Today, it’s closer to 12.5 million.
In the years following World War II, the US was a leading producer of motor vehicles, aircraft and steel.
“Since then,” says Vincent Vicard, head of international trade at the economic think tank CEPII, “foreign competition and productivity gains have shrunk the US relative share of manufacturing jobs”.
“And while it’s hard to say exactly what Trump wants,” Vicard told Al Jazeera, “part of the tariff plan is about raising revenue for income tax cuts and boosting industry.”
He pointed out that “some industries, like cars and steel, could benefit from lower foreign competition. However, they will also face higher prices for intermediate goods [used in their own manufacturing processes].”
H4: In what ways will tariffs hurt the US?
While Trump is hoping that his tariff regime will erode China’s trade surplus, Beijing benefits from entrenched competitive advantages.
According to Brian Coulton, a chief economist at Fitch Ratings agency, China’s industrial dominance won’t be easy to dislodge.
