Trump Suspends Most Tariffs for 90 Days, but Slaps 125% Levy on China

President Donald Trump on Wednesday announced a surprising 90-day suspension of most reciprocal tariffs that had been roiling international markets. However, in a dramatic turn, China was excluded from this easing of trade tensions. Instead, Chinese exports to the U.S. are now subject to a record-setting 125% tariff—a move that escalated already tense U.S.-China relations and sent ripples across the global economy.

White House press secretary Karoline Leavitt clarified that tariffs for most nations would be rolled back to a flat 10%, describing it as a shift toward fairer trade norms. Yet she emphasized that Beijing’s retaliatory stance had warranted “exceptional action,” marking the highest tariff rate ever imposed on any country by the U.S.

Market Reaction: S&P 500 Soars, Bonds Take a Hit

The immediate market reaction was volatile. Within minutes of the announcement, the S&P 500 surged by 7%, clawing back recent losses. Meanwhile, U.S. bonds faced a heavy sell-off, with 10-year Treasury yields rising sharply to 4.4%, reflecting deep investor uncertainty.

The business community had mixed responses. While equity markets celebrated reduced trade tensions with allies, economists flagged the simultaneous bond decline and global trade retaliation as indicators of possible deeper issues ahead.

China’s Counterstrike: 84% Tariffs and Sanctions

China responded forcefully. Beijing slapped 84% tariffs on all U.S. imports and added twelve American companies to its export control blacklist. Among them were tech, biotech, and defense suppliers. The Chinese Ministry of Commerce also expanded its “unreliable entities” list, banning these firms from operating or trading within China’s borders.

This escalation comes atop an already strained trading environment, where both nations had levied duties of 20–34% in previous rounds of tariff hikes. Now, trade between the world’s two largest economies hangs by a thread.

Oil Prices Crash, Recession Fears Intensify

• U.S. Bonds: Yields on 10-year Treasuries rose to 4.4%, signaling market skepticism and broad investor sell-off.
• Oil: Crude oil prices dropped to $55 per barrel—its lowest in four years—before slightly recovering to $61. Analysts see this as a signal of faltering global demand.
• Recession Risk: Economists, including KPMG’s Diane Swonk, predict a three-quarter “mild recession” starting Q2 2025, citing tightening monetary conditions and geopolitical instability.

Capitol Hill Reacts: Accusations, Strategy, and Damage Control

The sudden policy shift blindsided many lawmakers. During a fiery congressional session, Rep. Steven Horsford (D-NV) accused the administration of acting recklessly, calling it “amateur hour in global diplomacy.” Trade Representative Jamieson Greer countered, asserting the move was part of a “calculated provocation” designed to push rivals into renegotiating trade deals individually.

Treasury Secretary Scott Bessent backed that assertion, adding that the administration’s aim is to “unsettle the global status quo” to achieve more favorable terms long-term.

Unexpected Economic Advantage for China?

Ironically, manufacturers say the unpredictability of U.S. policy has led many to remain in China rather than shift to alternative countries. “Staying in China and making China work is everyone’s strategy right now,” said Travis Luther, CEO of a U.S.-based bedding company that imports bamboo fiber.

Asian competitors like Vietnam and India now face newly reimposed tariffs, making China, paradoxically, a more stable partner despite the 125% duty.

Mixed Democratic Response: Concerns Without Consensus

Democratic voices varied. Michigan Governor Gretchen Whitmer warned the policy might backfire, calling it “a hammer, not a scalpel.” However, she urged bipartisan efforts to build a more predictable economic environment.

Others like Gov. Josh Shapiro (PA) and Gov. JB Pritzker (IL) issued more pointed criticism, denouncing the tariffs as “a direct tax on American working families.”

Smaller Nations Like Lesotho Hit Hard

Collateral damage from the trade wars is already visible. Lesotho, a small African nation heavily reliant on U.S. trade under the African Growth and Opportunity Act (AGOA), now faces a 50% tariff. With 70% of its apparel exports going to the U.S., its industry faces potential collapse. “There’s panic,” said a local analyst. “They may be forced to shut down or move operations elsewhere.”