Global markets rally on temporary relief; tensions between Washington and Beijing deepen
In a dramatic move that sent shockwaves through global markets, U.S. President Donald Trump on Thursday announced a 90-day pause on tariff hikes for most countries — a decision that spurred strong rallies across Wall Street and Asian stock markets. However, the gesture of economic relief was overshadowed by an aggressive escalation in the ongoing trade dispute with China.
Despite halting new tariffs on the majority of U.S. trading partners, Trump confirmed a steep increase in duties on Chinese imports, raising them to an eye-watering 125 percent. The president cited Beijing’s “lack of respect” as the catalyst for the intensified measures.
In swift retaliation, China imposed tariffs of 84 percent on a wide range of U.S. imports. The countermeasures took effect Thursday at 12:01 p.m. local time (0401 GMT), marking the latest escalation in what has become a high-stakes economic standoff between the world’s two largest economies.
Speaking to reporters, Trump denied any backtracking on his broader trade agenda, emphasizing a need for "flexibility" amid market volatility.
“People were jumping a little bit out of line — they were getting yippy, a little bit afraid,” he remarked, using a sports term referring to a loss of composure under pressure.
Trump added that his decision was influenced by recent instability in the U.S. bond market, where rising yields amid a stocks sell-off raised red flags for investors.
“I saw last night where people were getting a little queasy,” he said, acknowledging the economic nerves triggered by his trade policies.
Despite escalating tensions with Beijing, Trump projected optimism over future trade negotiations, declaring, “A deal’s going to be made with China. A deal’s going to be made with every one of them.” Still, he quipped that Chinese leaders “don’t quite know how to go about it” yet.
Markets Soar on Temporary Relief
Trump’s surprise announcement, made via his Truth Social platform, had an immediate calming effect on markets battered by a week of tariff-induced turmoil.
The S&P 500 soared 9.5 percent to close at 5,456.90, snapping a string of sharp losses. Asian markets echoed the sentiment, with major gains recorded in Hong Kong, Tokyo, Singapore, and Sydney. Even the Shanghai Composite rose, despite China bearing the brunt of Trump's latest tariff hike.
The pause affects tariffs beyond the 10 percent baseline that had taken effect the previous weekend. Higher rates for key trading partners, including China and the European Union, had been scheduled to activate Wednesday — until Trump announced the 90-day reprieve.
The president said the decision followed outreach from over 75 nations eager to negotiate, many of which chose not to retaliate. Japan, which had faced tariffs as high as 24 percent under Trump’s “reciprocal” policy, welcomed the pause but reiterated its opposition to levies on steel and automobile exports.
Meanwhile, the European Union unveiled its own counter-tariffs set to begin next week, targeting over €20 billion worth of U.S. goods, including soybeans, motorcycles, and cosmetics. However, the EU notably refrained from retaliating against Trump’s earlier “Liberation Day” tariffs of 20 percent.
Behind the Curtain: Trade Diplomacy and Tough Talk
In private remarks to Republican allies, Trump celebrated what he views as a successful pressure campaign, claiming world leaders are scrambling to strike favorable deals with Washington.
“These countries are calling us up, kissing my ass,” he reportedly said during a Tuesday night dinner.
Trump maintains that his tariff strategy is a necessary course correction aimed at reviving domestic manufacturing and reining in unfair trade practices, particularly from China. He accuses Beijing of oversupplying global markets and "dumping" low-cost goods that undercut American industries.
With the trade war deepening, the Chinese government issued a travel advisory on Wednesday, urging its citizens to “fully assess the risks” of visiting the United States.
Adding to the tensions, U.S. Defense Secretary Pete Hegseth, speaking from Panama, accused China of posing broader “threats” to global stability — a warning that suggests economic disputes could spill into the geopolitical arena.
As the clock ticks on the 90-day tariff pause, markets, businesses, and diplomats alike will be watching closely to see whether this temporary truce becomes a turning point — or just another twist in an increasingly volatile global trade saga.