Tariffs on China will rise to 125% from 104%, following China's new retaliatory tariffs against the U.S. Other countries will revert to a universal 10% tariff rate. Trump stated, "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." He added, "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."
Mexico and Canada are exempt from the 10% tariffs, continuing at 25% unless compliant with the U.S.- Mexico- Canada Agreement. Sector-specific tariffs remain unchanged. Wall Street responded positively, with the Dow, S&P 500, and Nasdaq experiencing notable increases. Trump emphasized the need for flexibility in his strategy.
Treasury Secretary Scott Bessent indicated the pause was strategic, with Trump involved in negotiations. U.S. Trade Representative Jamieson Greer was unaware of the pause's implementation until after the announcement. Bessent and Commerce Secretary Howard Lutnick confirmed Trump's direct involvement in discussions, emphasizing the message of non-retaliation and negotiation.
The pause is seen as a tactical move in ongoing trade tensions, particularly with China. China's recent 84% retaliatory tariffs on U.S. goods reflect escalating tensions. Wendong Zhang, an assistant professor at Cornell University, noted China's reduced reliance on U.S. products and domestic consumption pivot.
Economists have raised recession forecasts due to the tariff strategy, though the pause offers temporary relief. Joe Brusuelas, chief economist of RSM U.S., suggested the U.S. economy might still face a recession. Goldman Sachs economists adjusted their recession forecast to a 45% chance in the next year.
Jake Colvin, president of the National Foreign Trade Council, viewed the pause as a positive step but warned of ongoing uncertainty with 10% tariffs and potential new duties.
Source: CNN Business