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In a surprising turn of events, President Donald Trump announced that he will now lower the high tariffs he placed on numerous countries — excluding China. Treasury Secretary Scott Bessent commented that the tariffs were designed to serve as a negotiating tactic within the trade landscape and that the three month halt is intended to utilize stronger negotiating position with other countries while still applying pressure to China.
Trump's change of thought Wednesday came a day after new tariffs had went into effect for most U.S. trade partners. The announcement followed a self-imposed dramatic storm in the financial markets that was only matched by the onset of COVID-19, which subsequently resulted in the removal of trillions worth of market value along with a surge in U.S. bond yields.
"I thought that people were jumping a little bit out of line, they were getting yippy, you know," Trump described to reporters subsequently to the announcement in an attempts to clarify the often blunt communication style he employs.
After regaining the presidency in January, Trump has made threats of severe trade sanctions against international partners on numerous occasions, only to retract those decisions at the last minute. International leaders, as well as many business leaders, are puzzled and anxious by the President’s unpredictable approach and the perpetual changes in policy, which a majority claim makes executing and forecasting economically increasingly difficult.
This was the most recent example of the chaotic Trump agenda, where the rationale behind the execution is equally as important as the aftermath in terms of an effective rolling out.
Treasury Secretary Scott Bessent emphasized that the withdrawal espoused earlier was indeed a strategy to bring other nations to the bargaining table. Nonetheless, Trump suggested later that the tumultuous market his administration was experiencing, following the announcement on April 2, was something he had considered in his decision-making calculus.
On the contrary to what was previously stated, a flex is necessary for the reporter.
Even though Washington is China's second most important source of United States imports, he still chastised the Chinese. He moved to add an additional 21% tax on Chinese imports, increasing it to 125% from 104%, as another industry showdown wages in the face of the two greatest economies in the world. Over the last week the two nations have gone back and forth on increasing tariffs on one another.
These new tariffs won't change anything until they decide to put transtport options on their flows. China's customs have stated that all goods coming from the country will be charged a fee once phase two is achieved. In addition, the previously mentioned 10% base tax on most imports will not alter these plans for the time being. The US will still limit principles and put in place these new fees.
Regardless of the goals permeating through this block, it does place a ceiling on how much US supplies can be burdened with counteractive policy measures without primary protective hurdles active on behalf approachable goods. The Congressional Budget Office will be in charge of policing how compliant US sent goods are with the law routed through the set frame.
“China is not likely to deviate from its strategy of maintaining the status quo, soaking up the pressure, and waiting for Trump to overreach. China thinks that Trump interprets giving up any concession as a proceeding weakness. So, relinquishing something only invites further stress,” explained Daniel Russel, vice president of international security and diplomacy at the Asia Society Policy Institute.
Russel continues, “Other countries will embrace the 90-day postponement — if it endures — but the whiplash from constant zigzags creates new forms of the uncertainty that businesses and governments detest.”
All U.S. stock indexes surged higher in response to the announcement, and the S&P 500 index marked a 9.5 percent increase in closing. Rising bond yields also leveled off, leading to the appreciation of the dollar in relation to safe-haven currencies.
As markets opened on Thursday, the optimism spread to Asia, with Japan’s Nikkei index also experiencing an increase close to 9%.
The day before, Trump’s tariffs caused a sustained selloff that wiped trillions of dollars from international markets and put pressure on U.S. Treasury bonds and the dollar. Canada and Japan took the opportunity to step in and stabilize the situation, which is typically the role of the United States during periods of economic turmoil.
Analysts noted that the sudden increase in share prices might not mend all the damage inflicted. With the apparent impact of the tariffs, a Reuters/Ipsos survey found that three out of four Americans anticipate a price surge in the forthcoming months. Surveys have also noted a decline in business investments and household spending.
Goldman Sachs still managed to reduce its recession probability estimate to 45% after Trump’s intervention and lowered it from 65% previously. “This was his strategy all along. And you might even say that he goaded China into a bad position.”
Bessent ignored the market turmoil question saying the sudden turn of events seemed to reward countries that complied with Trump’s instructions of not retaliating. He argued that using the tariffs spared negotiable ground, maximizing negotiating power. “We have endless possibilities for an economic future of America, including something that will truly change the game,” Bessent told reporters.
Bessent is the leader of the country-by-country negotiations focused on addressing foreign aid, military collaboration and the economy. The White House has revealed that Trump spoke with Japanese and South Korean leaders while a Vietnamese delegation met with US tradesmen on Wednesday.
Bessent did not reveal how long it would take to negotiate with the over 75 countries that have reached out.
Further, Trump stated a solution with China will most likely happen as well. But it has been made clear that China will be the last country talked to.
As he put it, “China wants to make a deal," adding further that, “They are just not sure how to go about it."
Trump informed the reporters that he had been thinking about putting a halt for several days. The White House attacked the alleged report after this on Monday, saying it was fake news that the administration is looking into putting a pause.
Prior to the announcement on Wednesday, Trump tried to give a confidence boost to investors, writing on his Truth Social account, “Everything is going to work out well. The USA will be bigger and better than ever before.”
He later went on to state: “THIS IS A GREAT TIME TO BUY!!!”
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