CALIFORNIA — Facing a global market meltdown, President Donald Trump on Wednesday abruptly backed down on his tariffs on most nations for 90 days, but raised his tax rate on Chinese imports to 125%.
Treasury Secretary Scott Bessent told reporters that Trump was pausing his so-called ‘reciprocal’ tariffs on most of the country’s biggest trading partners, but maintaining his 10% tariff on nearly all global imports. Import tariffs on goods from China, though, would surge to 125% “effective immediately,” Trump said on social media.
It was seemingly an attempt to narrow what had been an unprecedented trade war between the U.S. and most of the world to one between the U.S. and China.
Global markets surged on the development.
California Democratic Sen. Adam Schiff, a frequent critic of Trump, took to social media to question the administration’s intentions.
“Trump is creating giant market fluctuations with his on-again, off-again tariffs. These constant gyrations in policy provide dangerous opportunities for insider trading,” he wrote. “Who in the administration knew about Trump’s latest tariff flip flop ahead of time? Did anyone buy or sell stocks, and profit at the public’s expense?”
Schiff added “I’m writing to the White House — the public has a right to know.”
Before the pause was announced, Gov. Gavin Newsom put out a call directly to international leaders, urging them to continue thinking of California as a “stable trading partner” regardless of what happens in Washington.
The governor had previously directed the state to pursue international trade relationships outside of the federal government and called on foreign governments to exempt California-made products from retaliatory tariffs the rest of the country may face as a result of Trump’s tariffs.
“Donald Trump’s tariffs do not represent all Americans, particularly those that I represent here in the fifth-largest economy in the world, the state of California,” the governor said in a video posted to social media.
The Trump administration’s about-face on tariffs came after a strong reaction across the global economy.
The tariffs kicked in shortly after midnight, including 104% on products from China, 20% on the European Union, 24% on Japan and 25% on South Korea.
When a downturn appears on the horizon, investors typically crowd into U.S. Treasury notes as a safe haven, viewing the federal government as a source of stability. Not this time. Government bond prices are down, pushing up the interest rate on the 10-year U.S. Treasury note to 4.45% in a sign that the world is increasingly leery of Trump’s moves.
“The market is highly nervous about foreign investors stepping away from the US Treasury debt, which is sending yields sharply higher,” said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities said earlier Wednesday. “Markets more broadly, not just the Treasury market, are looking for signs that a trade de-escalation is coming. Absent any de-escalation, it’s going to be difficult for markets to stabilize.”
The Republican president was publicly defiant as the stock market recovered slightly, then sold off and then bounce back in morning trading. The S&P 500 stock index has fallen more than 18% since Feb. 18 as Trump’s tariff plans crystallized.
Business leaders warned of a likely recession.
JPMorgan Chase CEO and Chairman Jamie Dimon said there would “probably” be a recession, although he also deferred to his economists.“I do think fixing these tariff issues and trade issues would be a good thing to do,” he said in an interview with Fox Business Network’s “Mornings with Maria.”
On CNBC, Delta Air Lines CEO Ed Bastian said the administration was being less strategic than it was during Trump’s first term. His company had in January projected it would have its best financial year in history, only to scrap its expectations for 2025 due to the economic uncertainty.
“Trying to do it all at the same time has created chaos in terms of being able to make plans,” he said, noting that demand for air travel has weakened.
Treasury Secretary Scott Bessent has previously said it could take months to strike deals with countries on tariff rates, and the administration had not been clear on whether the baseline 10% tariffs imposed on most countries would stay in place. But in an appearance on “Mornings with Maria,” Bessent said the economy would “be back to firing on all cylinders” at a point in the “not too distant future.”
He said there has been an “overwhelming” response by “the countries who want to come and sit at the table rather than escalate.” Bessent mentioned Japan, South Korea, and India. “I will note that they are all around China. We have Vietnam coming today,” he said.
