Wednesday, April 09, 2025

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By Ben Berkowitz

https://www.axios.com/2025/04/09/trump-tariffs-pause-china-stocks-recession

President Trump paused the sweeping reciprocal tariffs the U.S. imposed this week, saying dozens of countries had reached out to negotiate new trade deals.

Why it matters: It’s the relief global markets, U.S. allies and many Trump advisers wanted, as fears of a global crisis mounted. But Trump didn’t back off fully, keeping 10% baseline tariffs in place while increasing tariffs on China to 125%.

• U.S. stocks promptly kicked off a ferocious rally, with the S&P 500 rising 7% in a matter of minutes. Gold, oil and cryptocurrencies surged as well, as investors quickly re-embraced risk.

The big picture: Since the day Trump took office, the global economy has been whipsawed by uncertainty over his trade plan — on and then off and then on, paused and then modified and then raised and then lowered.

• Meanwhile consumer and business confidence has plunged, the economy has slowed, and all sense of stability and permanency has evaporated.

Catch up quick: Trump announced the tariffs April 2 — a 10% base global tariff as of April 5, and sharply higher reciprocal tariffs on around 60 nations as of April 9.

• Economists had warned the tariffs could cause a severe global recession, and major investors warned of even worse, up to a possible “economic nuclear winter.”
• Wednesday’s 90-day pause, in effect, takes the tariff regime down to what many investors thought Trump would do in the first place.

Yes, but: While Trump lifted most of the global duties, he raised tariffs on China to 125%, blasting the country for retaliating to his initial levies.

• His global trade war has shifted, for the time being, to a U.S.-China trade war, though Treasury Secretary Scott Bessent declined to call it that when asked outside the White House.

• “The world is ready to work with President Trump to fix global trade, and China has chosen the opposite direction,” Commerce Secretary Howard Lutnick said on X.

What they’re saying: “It’s about bad actors, and what we will see is, some of the very early countries are China’s neighbors,” Bessent said.

• “China is the most imbalanced economy in the history of the modern world, and they are the biggest source of the U.S. trade problem — and indeed, they are a problem for the rest of the world. “

Editor’s note: This story was updated with additional reaction and developments.