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Trump Announces 90-Day Pause on Some Tariffs, But China Tariffs Rise to 125%

“Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately,” Trump wrote on Truth Social. “At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable.”

Trump added that he has authorized a “90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately.” It wasn’t immediately clear whether Trump’s 10% baseline tariff was on a pause, or if his higher reciprocal rates were on a pause.

Trump: “Based on the lack of respect that China has shown to the World’s Markets ...”

Trump Translated: “Based on the lack of respect that the stock market has shown for my policies, I will rethink them for 90 days.“

What Changed?

The 125 percent tariffs on China are now somewhat of a mirage.

Via Vietnam, Taiwan, and Mexico, China will re-route goods through those countries.

Also prices will not rise as much as before. But farmers will still need a bailout.

And we now have 90 days of more uncertainties.

Nothing fundamentally has changed. But Trump now has a clue of what the market thinks of his policies.

By the way, the sharpest rallies occur in bear markets.

Related Posts

April 9, 2025: China Retaliates with 84% Tariffs on the US, Most Trade Will Stop

Supply chains everywhere are disrupted. US farmers will be bailed out, again.

That’s what I said moments ago. My trade will stop comment was in reference to China.

If the 46 percent tariffs on Vietnam are lowered there will be a huge incentive for China to re-route goods there.

I have discussed this before.

Please consider my February 7, 2025 post Trump Announces Reciprocal Tariffs Next Week, a Major Trade War Escalation

Evidence is strong that China has circumvented tariffs by masking exports via Vietnam and Mexico.

The reduction in the trade deficit with China was little more that tariff avoidance via Vietnam and Mexcico.

Also see my January 18, 2025 post The US Trade Deficit with China is Understated by as Much as 30 Percent

Normal trade math does not add up. US imports and China exports are not in sync.

I asked Brad Setser, senior fellow for international economics at the Council on Foreign Relations, and Director of International Economics, for the United States Department of the Treasury to comment.

Setser replied “Chinese exports started exceeding US imports only in those categories with tariffs, and only after the tariffs were imposed.”

I commented “This appears to be an amusing case of China cleverly avoiding US tariffs but not clever enough to hide it better.”

If Trump lowers tariffs on China and Mexico, expect more tariff avoidance.

The “Made in Vietnam” trade is back on.

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