(AFP) – US President Donald Trump abruptly paused tariffs on most countries Wednesday after admitting they made the markets nervous, but doubled down on a brutal trade war with superpower rival China. Following days of market turmoil, Wall Street stocks saw historic surges in reaction to Trump’s announcement that he was halting a levy hike for almost all nations for 90 days. But Trump said he was raising tariffs on China to 125 percent 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.” Trump insisted that he “can’t imagine” increasing Chinese tariffs more than he has.
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 percent baseline tariffs on all countries which came into effect on Saturday, and higher rates on key trading partners like China and the European Union that he accused of cheating the United States, which activated on Wednesday. But as markets swayed yet again, Trump said in a surprise announcement on his Truth Social network that “I have authorized a 90 day PAUSE” on the higher tariffs, while the baseline 10 percent would remain.
He said 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 percent earlier Wednesday — in retaliation for Trump himself ramping up duties on Chinese goods to 104 percent. China’s finance minister said that “the United States simply piles mistakes on top of mistakes.” The European Union 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 “Liberation Day” tariffs of 20 percent that came into effect on Wednesday.
Wall Street stocks rocketed on Trump’s pause announcement. The S&P 500 surged 9.5 percent to 5,456.90, 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 American 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 United States, with Japan and South Korea among those sending delegations to Washington. “I’m telling you, these countries are calling us up kissing my ass,” 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 United States. 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 traveling to the United States. And US Defense Secretary Pete Hegseth then warned against Chinese “threats” as he visited Panama, whose canal is at the center of a row between Beijing and Washington.
burs-arp/jgc – Danny Kemp with Sam Davies in Beijing
© 2024 AFP
