Tariff Tensions Explained: Why Did Donald Trump Take A U-Turn?

From imposing exorbitantly high tariffs on countries across the world to postponing the implementation of reciprocal tariffs over 75 countries, the United States President Donald Trump is now far more committed to his attack against China, giving a massive boost to global stocks.

In his 'Liberation Day' speech Trump said that he will be imposing tariffs which will be effective from April 9, on countries that are engaged in "unfair trade practices" and have big deficits with the US.

Why Were Tariffs Paused?

The US President, Donald Trump has been under severe pressure for the last few days, especially from investors and business leaders alike, to reduce and remove tariffs.

Trump has also been contemplating about reducing tariffs in the last few days in his discussions with Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, he said, adding that the decision "probably came together this morning."

While speaking to reporters at the White House Trump said, "I thought that people were jumping a little bit out of line," and this is why he backed off. "They were getting a little bit yippy, a little bit afraid," he added.

Current Tariff Situation

While a baseline reciprocal tariff of 10% was announced on all the goods coming into the US, Trump has not removed this tariff rate and it will be applicable on all goods that are imported into the US.

Say No To Chinese!

The US President had imposed a tariff of 20% on Chinese goods, which was eventually topped up with an additional 34% on April 3, 2025.

Consequently, Beijing retaliated with its own 34% duty on American products. Additionally, Trump announced another 50% tariffs to take it to 84% and then to 104%. While announcing a pause on tariffs on April 9, Trump also announced a 125% tariff on China, which is also the world's second largest economy.

At present, China has imposed a tariff of 84% on US goods.

Markets In Green

After Trump's sudden announcement on April 9, the stocks observed their best rally since 2008, as euphoria overtook the markets. While the S&P 500 Index surged 9.5%, rebounding from the bear-market territory. The tech-heavy Nasdaq 100 surged 12% and the Chinese shares also zoomed in the hopes of more stimulus.

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