Trump Administration Pauses Most Tariffs, Escalates Trade War with China

In a dramatic shift in trade policy, the Trump administration announced a 90-day pause on most of its newly imposed tariffs, offering a temporary reprieve to numerous countries engaged in trade negotiations with the United States. However, this pause excludes China, as the administration simultaneously escalated its trade war with the Asian nation by significantly increasing tariffs on Chinese goods. The move has sent shockwaves through global markets, triggering both rallies and anxieties as businesses and consumers brace for the potential long-term consequences.

A Global Pause, Except for China

On Wednesday, President Trump declared a 90-day pause on the "reciprocal tariffs" that were slated to take effect on a wide range of imports from nearly 60 countries. The announcement, made via his social media platform, Truth Social, cited ongoing trade discussions with over 75 countries that had, at his "strong suggestion," refrained from retaliating against the United States. During this 90-day period, a substantially lowered reciprocal tariff of 10% will be in effect for these nations.

However, China remains a notable exception. Citing a "lack of respect that China has shown to the World's Markets," President Trump announced an immediate increase in tariffs on goods imported from China to 125%. This escalation marks a significant intensification of the trade war between the world's two largest economies, raising concerns about potential economic repercussions.

Rationale Behind the Tariff Actions

The Trump administration has framed its tariff policies as a means to address what it considers unfair trade practices, protect American workers and industries, and encourage domestic manufacturing. The administration views trade deficits as inherently harmful and aims to eliminate them through reciprocal tariffs, where countries are charged tariffs equivalent to those they impose on U.S. goods.

In a March 2025 report to Congress, the U.S. Trade Representative outlined the administration's vision for trade, emphasizing economic and national security challenges and a plan to rebalance trade. The report underscored the importance of President Trump's "America First Trade Policy" in addressing these challenges.

The administration also invoked the International Emergency Economic Powers Act (IEEPA) to justify the tariffs, declaring a national emergency based on large and persistent U.S. trade deficits. This action grants the president broad authority to regulate foreign commerce.

Economic Implications and Market Reactions

Economists have expressed concerns about the potential negative impacts of the tariffs on the U.S. economy. Increased import costs could lead to higher prices for businesses and consumers, potentially dampening demand and slowing economic growth. Some economists have warned that the tariffs could even trigger a recession.

The Tax Foundation estimated that Trump's tariffs, before accounting for foreign retaliation, would reduce long-run U.S. GDP by 0.8%. The Yale Budget Lab projected that the tariffs would increase U.S. prices by 2.3% in the near term, equivalent to an average consumer loss of $3,800 per household.

Financial markets initially reacted positively to the announcement of the 90-day pause, with U.S. stock markets surging on Wednesday. However, the gains were tempered by concerns about the ongoing trade war with China and the potential for continued market volatility.

China's Response and Global Reactions

China has strongly condemned the U.S. tariff actions, accusing Washington of "economic bullying" and threatening global trade stability. In response to the increased tariffs, China has imposed retaliatory tariffs on U.S. goods, raising its levies to 84%.

The European Union, initially slated to implement counter-tariffs against the U.S., has put its plans on hold following the 90-day pause announcement. However, the EU warned that it would reinstate its countermeasures if negotiations with Washington prove unsatisfactory.

Other countries are also closely monitoring the situation, with many seeking to negotiate trade deals with the U.S. to avoid being subject to the tariffs. The Trump administration has indicated that it is open to discussions with countries willing to address trade imbalances and align with the U.S. on economic and national security matters.

The Future of Trade Relations

The 90-day pause offers a window of opportunity for the U.S. and its trading partners to engage in negotiations and potentially reach agreements that address the administration's concerns. However, the ongoing trade war with China and the potential for renewed tariff actions after the pause period create significant uncertainty for businesses and consumers.

The long-term impact of the Trump administration's trade policies remains to be seen. While the administration aims to protect American industries and create jobs, economists warn of potential negative consequences, including higher prices, slower economic growth, and increased trade tensions. The coming months will be crucial in determining the future of global trade relations and the economic landscape.