On Wednesday, President Trump suddenly reversed the course on sudden global tariffs that shook the market, disrupt the members of his own party and caused a recession horror. Hours after he punished taxes in nearly 60 countries, the president said he would suspend them for 90 days.
But Trump didn’t extend that suspension to China, instead opting to raise tariffs again on all Chinese imports, raising those taxes to a whopping 125%. The decision comes after Beijing increased collection of American goods to 84% Wednesday afternoon at an escalating rate among the world’s largest economy.
In a post about the True Society, the president said the country has approved a “90-day suspension” in which the country faces a “severely reduced mutual tariff” of 10%. As a result, almost all US trading partners face 10% blanket tariffs, along with the 25% tariffs Trump has imposed on cars, steel and aluminum.
The market recovered rapidly after Trump’s post. The S&P 500 scored a few percentage points in minutes and closed with a rise of over 9%, bringing a sharp turn of losses back. Wednesday was the best day for the S&P 500 since it recovered from the 2008 financial crisis.
Almost all inventory within the index will rise. Some airlines, tech companies and Tesla were among those who were surged more than 20%. The automaker’s shares rose sharply despite 25% tariffs remaining on imported cars. Ford and General Motors both rose over 7%.
Trump had claimed for days that he hadn’t worried about a market defeat, but on Wednesday admitted that the recession had fallen into his decision.
“It’s been looking pretty gross over the past few days,” Trump said. “I thought people were jumping a little lined up,” he said as he explained his decision. “They had got Yippy. They were a bit scared.”
Trump’s course changes, amid the US government’s bond market and rapid sales in the dollar, are generally considered the safest corner for investors in times of chaos. Large and small investors were watching the stock market value disappear within a few days. Economists have more and more sounded urgent warnings that the US may be careful about a recession of its own work.
Asked Wednesday if the bond market response caught his attention, Trump said he noticed investors “feeling bad” over the weekend.
“I was looking at the bond market. The bond market is very difficult, but if you look at it now, it’s beautiful,” he said.
The 90-day tariff suspension ultimately caused a surge in stock prices, prompting the president to suggest that bystanders at the White House event may have set a “record.”
Earlier that day, Trump told Americans, “It’s cool!” And it’s immediately followed with a post saying, “This is the best time to buy!!”
It prompted some Democrats who suggested that Trump was intentionally manipulating the stock market. During a House hearing Wednesday, several Democrats asked US trade representative Jamieson Greer about the president’s purpose.
“It’s not a market manipulation,” Greer said. “You are about to reset your global trading system.”
The president announced last week that he would raise tariffs to levels he hasn’t seen for a century. As markets shrink, Trump and his advisors argued that other countries are committed to keeping tariffs up until they lower trade barriers and cause other economic changes.
Dozens of foreign countries competed to frame delegations to appeal to the Trump administration. Greer said he held a meeting with officials from Europe, South Korea, Ecuador and Mexico on Tuesday at his hearing Wednesday.
Vietnamese officials have offered to cut tariffs on US apples, cherries and ethanol and brought a term sheet to a meeting that spells out changes they were willing to make, Glee said. He predicted that negotiations would lead to a “open overseas market” and create a “noble cycle” for American manufacturing.
Greer criticized the typical way of negotiating trade transactions, explaining that “providing others access to the market, asking them to interact with you for several years, and in the end there is no market access.”
“And there’s a Trump way,” he added.
As the hearing was coming to an end, Trump sent his post announcing the suspension.
“This is amateur hour,” cried Nevada Democrat Stephen Horseford. “It looks like your boss pulled the rug from under you.”
But while Trump lowered tariffs in most countries around the world, until at least July 9th, Wednesday’s event implemented punitive tariffs in China, the second largest US import source last year.
China manufactures most of the world’s mobile phones, computers, toys and many other products. Once these items are brought to the US, importers (most of which are American companies) are expected to pay the government the costs of the goods themselves at a fee.
Beijing and Washington have been engaged in fierce conflicts since Trump returned to the White House. The president focused on China as an economic invader whose entry into the World Trade Organization hampered workers and communities across the United States. China has become a manufacturing powerhouse, but many US industries benefit from access to the Chinese market.
Asked on Wednesday if he hopes he will continue to raise taxes in China, Trump said no and suggested he waited for a call from Chinese leader Xi Jinping, so the two were able to make the deal.
“China wants to do business,” he said. “They just don’t know how to get it.”
Last week, Beijing responded with equal collection after Trump imposed a 34% tariff on China. Trump then added an additional 50% tariff. This coincided with China’s own 50% collection.
On Wednesday, the Commerce Department announced separately that it had posted export restrictions on 12 American companies, adding six more American companies to its list of “unreliable entities.”
Trump’s advisers quickly tried to spin the decision to remove most tariffs as a global victory. Becent said the tariffs were working to seek deals with some of China’s closest neighbors, including Vietnam and Cambodia, to the US.
On Wednesday afternoon, the president told reporters that in addition to the 90-day suspension, he may consider exempting some U.S. businesses from tariffs. He said his decisions on this would be “instinctively.”
The report was contributed by Talmon Joseph Smith, Colby Smith, Joe Lennison, Robert Jimison, Keith Brajar and Alan Rappyport.
