Following days of market turmoil, Wall Street stocks surged in reaction to Trump’s announcement on his Truth Social network that he was halting levies for almost all nations for 90 days.
But Trump said he was raising tariffs on China to 125% because of a “lack of respect.”
Trump denied that he had backtracked on the tariffs, telling reporters as he welcomed a group of motor racing champions at the White House that “you have to be flexible.”
“People were jumping a little bit out of line, they were getting yippy, a little bit afraid,” Trump said. “Yippy” is a term in sports to describe a loss of nerves.
He said he had been watching the “very tricky” state of the crucial US bonds market before his decision. “I saw last night where people were getting a little queasy.”
Trump however predicted that trade deals will be made with all countries, including China.
“A deal’s going to be made with China. A deal’s going to be made with every one of them,” Trump said, adding however that China’s leaders “don’t quite know how to go about it.”
China duel
Markets have lost trillions of dollars in value since Trump’s announcement of sweeping global tariffs one week ago on what he called “Liberation Day”.
Trump had imposed a 10% baseline tariffs on all countries which came into effect on Saturday, and higher rates on key trading partners like China and the EU that he accused of cheating the US, which activated on Wednesday.
But as markets dipped yet again, Trump said in a surprise announcement on his Truth Social network that “I have authorised a 90 day PAUSE” on the higher tariffs, while the baseline would remain.
He adding that he took the decision after more than 75 countries reached out to negotiate and did not retaliate.
At the same time, Trump ramped up his confrontation with China.
Beijing had raised tariffs on US imports to 84% earlier Wednesday – in retaliation for Trump himself ramping up duties on Chinese goods to 104%.
China’s finance minister said that “the US simply piles mistakes on top of mistakes.”
The EU had earlier launched its own counterattack, announcing measures targeting some US products from Tuesday in retaliation for American duties on global steel and aluminum exports.
The 27-nation bloc will hit more than 20 billion euros’ worth of US products, including soybeans, motorcycles and beauty products.
But the EU notably did not retaliate against the separate 20% US tariffs on all goods that came into effect on Wednesday.
‘BE COOL!’
Trump had earlier Wednesday urged Americans to “BE COOL!” – and Wall Street stocks rocketed on Trump’s pause announcement.
The S&P 500 surged 6.0% to 5,281.44, snapping a brutal run of losses over the past week.
European and Asian stock markets had earlier tumbled along with oil and the dollar.
US bond yields had also risen amid a sharp sell-off – a major economic red light as sovereign government debt is normally seen as a safe haven for investors in troubled times.
Before his pivot, Trump said world leaders were rushing to negotiate “tailored” deals with the US, with Japan and South Korea among those sending delegations to Washington.
“I’m telling you, these countries are calling us up kissing my **s,” Trump told a dinner with fellow Republicans on Tuesday night.
Trump believes his policy will revive America’s lost manufacturing base by forcing companies to relocate to the US.
The billionaire former property tycoon has particularly raged against China, accusing it of excess production and “dumping” inexpensive goods on other economies.
The tariffs have raised tensions between the world’s two biggest economies.
China warned tourists on Wednesday to “fully assess the risks” before travelling to the US.
And US defence secretary Pete Hegseth then warned against Chinese “threats” as he visited Panama, whose canal is at the centre of a row between Beijing and Washington.