President Donald Trump has struck a major economic blow to China by announcing a 125% import duty on their products. Previously, the US had raised this rate to 104%. In response, China increased tariffs on US imports to 84%. Additionally, Trump granted significant relief by offering a 90-day respite on 'reciprocal tariffs' to 75 countries, including India, during which a minimal 10% duty will apply.
This decision comes at a time when trade tensions among major global economies are peaking and concerns of a global recession are deepening. While some see Trump's move as a strategy to pressurize China, critics argue it's a 'U-turn' following market declines and heavy criticism.
Trump posted on his social media platform Truth Social, saying, “I've authorized a 90-day PAUSE, reducing reciprocal tariffs for other countries to 10%, effective immediately.”
This step is considered Trump's most aggressive amid US-China trade tensions. In his post, he wrote, “In response to China's disrespect towards the global markets, the US will now impose a 125% duty. China must understand that the exploitation of the US and other countries will no longer be tolerated.”
Earlier, China had also retaliated on Wednesday by increasing taxes on US imports to 84%, from 34% earlier. China's foreign ministry criticized this, stating that it will take strong and solid measures to protect its legitimate rights and interests.
Relief for 75 Countries Including India
Nations like India are relieved from this tariff campaign by America. These countries won't face the new tariff rates and have been granted a 90-day exemption, with only a 10% duty applied during this period. US Treasury Secretary Besant mentioned that nations not retaliating against America will be rewarded, as Mexico and Canada have been included in the 10% tariff slab for relief.
Besant stated that the 90-day 'pause' wasn't due to market reactions. The market failed to understand that the tariff plan was already at its maximum level. This decision was made because China was persistently confrontational. President Trump's decision reflects that America won't back down.
Initially, Trump imposed tariffs ranging from 30% to 45% on several Asian countries, including a 26% tariff on India and a 34% tariff on China. Additionally, the Trump administration announced tariffs on imported goods from Vietnam (46%), the European Union (20%), Switzerland (31%), and Taiwan (32%).
Source: aajtak
Surge in Stock Markets
Following Trump's announcement, US stock markets saw a robust surge. The S&P 500 rose by 474.13 points (9.52%), closing at 5,456.90. The Nasdaq Composite jumped 1,857.06 points (12.16%), closing at 17,124.97, and the Dow Jones Industrial Average surged by 2,962.86 points (7.87%), closing at 40,608.45. During this period, Walmart's shares rose by 8%. Market analysts see this as a step toward a clear policy and potential agreement. Following Trump's announcement, the US stock market gained a record 4 trillion dollars in just 10 minutes, indicating the widespread economic impact of this decision.
No Other President Has Done This: Trump
Speaking to the media, President Trump said, “I felt that people were going too far. No other president would do what I did. Someone had to do it because it wasn't sustainable. I'm proud of what I've done. I've paused new tariffs on countries not retaliating because I said if they respond, we'll double our response. And that's what I did with China. Let's see what happens next. I believe the outcome will be excellent. I think our country will be in a position within a year or perhaps sooner, beyond anyone's imagination. I'm happy I did it.”
Decision Not Made Under Pressure: White House
Responding to questions about this U-turn-like decision by Trump, US Treasury Secretary Scott Besant said, “This is not a response to market pressure. It's part of the President's strategy. He deliberately put China in a position to expose themselves as wrong to the world. Over 75 countries have reached out to America, and each will be approached for tailored solutions. We're overwhelmed by this response. Our allied countries want to negotiate in good faith. Therefore, a 90-day break has been given. President Trump himself wants to be personally involved in this process.”
Escalating Trade War Concerns Companies
Trump's new tariff policy seems to be pushing the US-China trade war to new heights. Starting with a 10% tariff in February, it has now reached 125%. Trade analysts fear this situation will affect domestic US companies as well, with increased production costs, job cuts, and reduced international competitiveness. Many American companies have warned that costs will skyrocket, they may need to lay off staff, and find it difficult to compete in the global market.
China has reacted strongly to Trump's decision, stating it will not succumb to US pressure. Conversely, the US argues that the trade deficit with China is unbalanced and needs correction. According to statistics, last year China exported goods worth approximately $439 billion to the US, while the US exported only $144 billion to China. White House Press Secretary Caroline Leavitt said, “When someone tries to harm America, President Trump will respond with even greater force.”
