On Wednesday, April 9, 2025, U.S. President Donald Trump announced a significant shift in his administration’s trade policy, authorizing a 90-day pause on steep reciprocal tariffs imposed on dozens of countries, while lowering the tariff rate to a universal 10% during this period. The decision, which comes amid a tumultuous week of market volatility triggered by escalating global trade tensions, marks a partial retreat from the aggressive tariff regime introduced just days earlier. However, the pause does not extend to China, where tariffs have been sharply increased to a total of 145%, intensifying the ongoing trade war between the world’s two largest economies. In response, China retaliated on Friday, April 11, raising its levies on U.S. goods from 84% to 125%, effective April 12, 2025, according to the Customs Tariff Commission of the State Council.

A Strategic Pause Amid Market Turmoil

The announcement follows a week of economic upheaval, with global financial markets reeling from the initial rollout of Trump’s “reciprocal” tariffs, which targeted nearly 60 countries with rates ranging from 11% to 50%. The policy, intended to address perceived trade imbalances and protect American industries, sparked widespread concern about a potential global recession. Stock markets plummeted, with the S&P 500 losing significant value, and bond markets signaled distress, prompting criticism from business leaders and even some of Trump’s allies.

In a statement posted on Truth Social, Trump explained that the pause was prompted by outreach from over 75 nations seeking to negotiate trade solutions. “These countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States,” he wrote, framing the pause as a reward for non-retaliation and an opportunity for “bespoke” trade negotiations. The universal 10% tariff, which remains in place, ensures that some pressure persists while talks unfold over the next three months.

Treasury Secretary Scott Bessent described the move as a calculated strategy to maximize negotiating leverage, asserting that the initial tariffs had successfully brought countries to the table. “This was the President’s strategy all along,” Bessent told reporters, emphasizing Trump’s desire to be personally involved in crafting trade agreements. The pause also applies to existing tariffs on specific goods, such as steel, aluminum, and automobiles, though exemptions for goods already in transit before May 27, 2025, have been granted.

Escalating Tensions with China

While most nations received a reprieve, China faces a dramatically different reality. The White House confirmed that tariffs on Chinese imports now stand at 145%, incorporating a 125% reciprocal tariff announced on Wednesday and a pre-existing 20% levy tied to fentanyl-related trade measures. The decision to single out China came after Beijing imposed retaliatory tariffs of 84% on U.S. goods, a move Trump cited as evidence of “the lack of respect that China has shown to the World’s Markets.”

China’s response was swift and resolute. On Friday, the Customs Tariff Commission of the State Council announced an increase in tariffs on U.S. imports to 125%, effective April 12, 2025. The Chinese Ministry of Finance stated that the escalation was a direct countermeasure to the U.S.’s “abnormally high tariffs,” warning that further U.S. actions would be met with indifference, as current tariff levels have already rendered U.S. goods uncompetitive in China. Chinese President Xi Jinping cautioned that Trump’s policies risk isolating the U.S. economically, while state media reiterated Beijing’s commitment to “fight to the end” in the trade dispute.

The tit-for-tat escalation has deepened concerns about the broader economic fallout. Economists warn that the U.S.-China trade war, now a focal point of Trump’s tariff agenda, could disrupt global supply chains, raise consumer prices, and exacerbate inflationary pressures. Retailers, already bracing for higher costs, reported consumer stockpiling in anticipation of price hikes, while industries reliant on Chinese imports—such as electronics and pharmaceuticals—face mounting uncertainty.

Global Reactions and Economic Implications

The 90-day pause was broadly welcomed by other trading partners, with markets rebounding sharply after the announcement. The S&P 500 surged over 9%, and Asian and European indices followed suit, reflecting relief at the temporary de-escalation. The European Union, which had approved retaliatory tariffs but suspended them for 90 days, signaled openness to negotiations, with Commission President Ursula von der Leyen emphasizing a desire for “satisfactory” outcomes. Countries like Vietnam, Japan, and South Korea have already initiated trade discussions with U.S. officials, aiming to secure favorable terms before the July deadline.

However, the pause does little to alleviate long-term uncertainty. A 10% baseline tariff remains in effect globally, and the threat of reinstating higher rates looms if negotiations falter. Economists, including Joe Brusuelas of RSM US, argue that the U.S. economy remains vulnerable to recessionary pressures due to the cumulative impact of trade disruptions. Goldman Sachs has reinstated a 45% recession probability for the next 12 months, citing persistent economic shocks.

For American consumers, the immediate effects are already evident. Retail stocks, particularly those with supply chains outside China, spiked after the pause, but analysts warn that sustained tariffs—even at 10%—could elevate prices for everyday goods. Amazon CEO Andy Jassy noted that third-party sellers may pass tariff costs onto consumers, a trend likely to intensify if the China tariffs persist.

Looking Ahead

As the 90-day truce begins, the Trump administration faces a delicate balancing act: leveraging the pause to secure trade concessions while managing domestic and global economic fallout. The focus on China, while politically resonant, risks entrenching a prolonged trade war with no clear resolution. Beijing’s defiance, backed by a domestic push for self-reliance, suggests that concessions may be hard-won, if achievable at all.

For now, the pause offers a temporary reprieve for markets and trading partners alike, but the path forward remains fraught. With negotiations set to dominate the next three months, the world watches closely to see whether Trump’s tariff gamble will yield lasting trade reforms or deepen economic divides. As one analyst put it, “The tariff war isn’t over—it’s just on hold, except for China, where it’s only getting hotter.”