In a total curveball, President Trump just hit pause on his sweeping new tariffs – well, for almost everyone except China. The result? Wall Street went wild. The Dow exploded upward by 2,600 points, clocking in its biggest rally in five years.
Trump’s move came out of nowhere. In a Truth Social post, he announced that tariffs for most countries would drop to 10% for the next 90 days. That’s a sharp turn from the aggressive tariff hikes rolled out earlier this month. Trump says over 75 countries reached out to negotiate trade terms, so the U.S. is giving them some breathing room to talk it out.
But China? That’s a whole different story.
While most of the world gets a break, Trump jacked up tariffs on Chinese imports to a jaw-dropping 125%, effective immediately. Why? According to Trump, it’s about respect – or lack thereof. He accused China of showing zero regard for the global market and warned that the days of them “ripping off” the U.S. are over.
Investors didn’t just like the news – they loved it. The S&P 500 shot up 7%, and the overall mood on the trading floor turned euphoric. With a tariff pause in play, the fear of a prolonged global trade war just took a step back.
Traders have been skittish for weeks, bracing for retaliatory tariffs from Europe and beyond. Trump’s decision to ease off the gas pedal – even temporarily – was enough to light up the markets.
Here’s the gist of his post:
“Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China… to 125%, effective immediately.”
“[More than 75 countries]… have not retaliated… I have authorized a 90-day PAUSE… with a substantially lowered Reciprocal Tariff… of 10%.”
Straight from the keyboard of Trump himself – with Commerce Secretary Howard Lutnick confirming Trump typed it out with Treasury Secretary Scott Bessent watching.
Let’s be real – a 125% tariff on Chinese goods is massive. It could trigger a sharp reaction from Beijing. But the 90-day grace period for everyone else buys time, calms tensions, and boosts investor confidence – at least for now.
This gives U.S. allies a chance to work things out diplomatically. It also shows that Trump’s going for shock-and-awe tactics, ramping up pressure on China while showing leniency elsewhere.
What Comes Next?
- Expect China to respond, and possibly hard. Previous trade spats have seen tit-for-tat tariffs fly fast.
- The 90-day timer is now ticking – what happens after that is anyone’s guess.
- If Trump doesn’t see progress in trade talks, that 10% could shoot right back up.
Love him or hate him, Trump knows how to grab headlines and move markets. Today’s tariff pause maneuver sent a clear signal: cooperate, and you get a break – defy, and you get hit. How this plays out over the next 90 days could shape the global economy in a big way.
For now, Wall Street’s throwing a party.
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