US President Donald Trump abruptly halted tariffs on most countries on Thursday, boosting global markets, but he has also moved forward with a tough trade war with superpower rival China.
After days of turmoil, stocks on Wall Street and across Asia surged after Trump announced a 90-day moratorium on tariff increases for nearly all countries. But Trump also said he increased tariffs on China to 125 percent due to a “lack of respect.”
Beijing has retaliated by imposing retaliatory tariffs of 84 percent on US imports, taking effect at midday (0401 GMT) on Thursday, the latest blow in the growing standoff between the world’s two largest economies. Trump has ruled out backing away from tariffs, telling reporters, “You have to be flexible.”
“People were jumping out of line a little bit, they were yippeeing, a little bit scared,” Trump said. “Yippeeing” is a term used to describe nervousness in sports. He said he was looking at the “very complex” situation in the crucial US bond market before making his decision.
“I saw people getting a little fed up last night,” he said, “as US bond yields rose during the US stock sell-off – US sovereign government debt is generally seen as a safe haven for investors in times of crisis.” Trump has also predicted that trade deals will be reached with all countries, including China, which has now refused to roll back retaliatory tariffs on American goods.
“There’s going to be a deal with China. They’re going to have a deal with each other,” Trump said, “but the Chinese leaders don’t know how to go about it.” Trump also said he “cannot imagine” more tariffs than Chinese tariffs.
As Beijing weighs the costs of further escalation, Bloomberg reported that China’s top leadership will meet on Thursday to plan more stimulus to boost its already weak economy, which was already ailing from the trade war.
Conflict with China
Markets are on a rollercoaster ride ahead of a dramatic break on Wednesday after Trump announced global tariffs on what he called “Liberation Day” a week ago. Trump imposed a 10 percent basic tariff on all countries that took effect on Saturday. He has slapped higher tariffs on major trading partners such as China and the European Union (EU), which he has accused of cheating the United States. The tariffs went into effect on Wednesday.
But as markets were reeling again, Trump made a surprise announcement on his Truth social network, saying “I have authorized a 90-day grace period” on the higher tariffs, while the base rate would remain at 10 percent. He said the decision was taken after more than 75 countries approached him for talks and there was no retaliation.
Japan, which has imposed a 24 percent tariff under so-called reciprocal tariffs, said it welcomed the news but still “strongly” demanded that Washington reconsider other taxes on its steel and auto exports. The EU had previously launched its own counterattack, announcing measures targeting some US products starting next week in retaliation for US tariffs on global steel and aluminium exports.
The 27-nation bloc will affect more than 20 billion euros worth of American products, including soybeans, motorcycles and beauty products. But the EU notably did not retaliate against separate ‘Liberation Day’ tariffs of 20 percent that went into effect on Wednesday.
