In a major policy shift, U.S. President Donald Trump has announced a Trump’s 90-Day Tariff pause for many trading partners. This decision comes just hours after aggressive new tariffs sparked global market chaos. While this move gave global investors a sense of relief, China faced a much harsher outcome.
A Sudden Reversal
On Truth Social, Trump revealed that while tariffs would be temporarily lifted for countries open to negotiations, China would be hit even harder. The tariff rate on Chinese imports was raised to 125%, up from 104%, within just one day. This sharp increase highlights growing tension between the two economic giants.
The White House confirmed that the 90-day pause is designed to give the U.S. time to renegotiate trade agreements. Countries willing to come to the table will benefit from reduced tariffs during this period. Trump claimed more than 75 countries had reached out to begin talks on trade, currency, and other economic issues.
“These countries have not, at my strong suggestion, retaliated in any way… I have authorized a 90-day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately,” Trump said.
Markets React Strongly
The news triggered a strong market rally. The S&P 500 surged by almost 9%, and the Nasdaq climbed over 12%. Investors, who had been spooked by fears of a trade-driven recession, welcomed the sudden break in tensions.
Bitcoin also saw a positive rebound, gaining 8% after recent declines. Other cryptocurrencies followed suit, signaling growing confidence across financial markets.
Meanwhile, bond yields, which had been rising earlier, began to dip again. The U.S. dollar also gained strength, especially against safe-haven currencies like the Japanese yen.
Uncertainty Lingers
Despite the market’s positive reaction, the global outlook remains uncertain. Trump’s 90-day tariff pause is part of a larger pattern of unpredictable trade decisions. While countries other than China now have breathing room, the situation in China continues to worsen.
Scott Sheridan, CEO of tastytrade, spoke about the recent market conditions:
“We are seeing 100-point S&P moves daily, which is amazing for all trading and especially derivatives. So long as the VIX stays elevated relative to its average, I would expect the big swings to continue.”
The VIX, often called the “fear index,” has remained high, reflecting the market’s continued nervousness.
What’s Next?
While Trump’s decision has temporarily cooled tensions, questions remain. Will real trade agreements follow, or is this just a delay before the next confrontation?
U.S. officials say that the negotiations during the 90-day window could cover not just trade but also security and foreign aid. However, there’s no clear timeline or structure for these talks. With Trump’s track record of sudden policy changes, investors and world leaders alike remain cautious.
For now, the markets are hoping that the pause leads to progress, but many are preparing for more surprises.
President Trump’s 90-day tariff pause has brought a temporary lift to both traditional and crypto markets. However, the sharp increase in tariffs on Chinese imports shows that the trade war is far from over. The next few months will be crucial. Whether this move leads to lasting trade deals or more instability is yet to be seen. Investors should stay alert as the situation continues to unfold.
