Just as the second round of his announced tariffs began to take effect, President Trump said he would delay their full implementation for many countries for 90 days. However, because China retaliated against the 104% tariff on its goods by applying 84% import duties on American goods, the White House is firing back by pushing the China levy back to 125%. This pause will apply to the 75 countries that have reciprocal tariffs applied against them but have not announced any retaliation against the planned higher tariff rates. However, a 10% tariff applied to all imports remains for those countries during the pause.
This news has allowed the market to recover a bit, with a few tech companies rebounding from hitting their record lows. The 90-day period will also hopefully be enough time for many countries to negotiate a deal with the White House so that global trade can return to normal. However, the U.S.’s actions against Chinese trade are the latest in a series of moves escalating the trade war between the two countries.
Trump first applied a 20% tariff on Chinese goods in February, alongside the 25% taxes on Canada and Mexico. This jumped to 54% when he announced additional import duties in early April. Because of this, Beijing put a 34% levy on American products and restricted the export of several rare earth metals.
Trump responded with an additional 50% tax on the already existing 54%, pushing tariffs to 104%. Because of this, China retaliated with its own 50% increase, pushing import taxes on American goods to 84%. This did not end there, though, as the latest Truth Social post by Trump says that he will push taxes on Chinese imports to 125%.
He made this announcement in the early afternoon in the U.S., which is just beyond midnight in Beijing. So, we’ll have to wait a few hours to see how China will react to this news.
It seems that the tariffs that Trump announced are meant to bring the rest of the world to the negotiating table, with Commerce Secretary Howard Lutnick posting on X (formerly Twitter), “The world is ready to work with President Trump to fix global trade, and China has chosen the opposite direction.”
Incidentally, the E.U. just applied its own retaliatory tariffs on the U.S. a few hours before the announcement. However, this will not take effect until next week, so we don’t know if it will retract these levies or if Trump will also punish Europe with more taxes if it does not change its direction.
