Photo: AI
US President Donald Trump has unexpectedly announced a temporary suspension of the customs escalation with most of the US partners, cancelling the so-called “reciprocal duties” introduced just a week ago for 90 days. But while the world breathes a sigh of relief, Beijing is getting a new blow – duties on imports from China have risen to a record 125%.
This asymmetric policy has already caused significant shifts in financial markets and investor concerns. However, economists warn that the instability and unpredictability of Trump’s approach could have deeper consequences than the duties themselves.
What happened and why is it important?
On Wednesday at 13:18 Washington time, Trump announced on Truth Social:
“I am suspending mutual duties for 90 days for all countries except China. There, we are acting more firmly.”
Immediately afterwards, global stock exchanges began to show growth, compensating for the losses caused by the previous days of trading chaos. However, behind the scenes, something else was happening – financial panic, the threat of a bond rally, and the intervention of key figures in the White House.
What made Trump change his mind?
According to The New York Times, the initiative to stop the duties was lobbied not only by Wall Street financiers, but also by influential Republicans – from Elon Musk to congressmen. The main reasons:
- Stock market collapse (trillions of dollars disappeared from the capitalisation);
- A sharp rise in US 10-year government bond yields (above 4.5%);
- The risk of a credit crunch and recession;
- Political pressure from allies and competitors at the same time.
The Trump administration is worried that the “mostly rhetorical” trade strategy has turned into a real crisis.
China is an exception: duties increased even further
Despite the pause in the trade conflict with the world, China has become a target of escalation. Duties on Chinese goods were increased from 104% to 125%. This was in response to Beijing’s actions, which introduced new countermeasures.
No direct talks are currently underway between the US and China. Trump has hinted at a possible conversation with Xi Jinping, but according to the Financial Times, Beijing will not negotiate without a clear preliminary agreement.
“They are trying to intimidate us, but we will not give in,” they replied from China.
What will happen to Europe, Canada and Mexico?
Trump’s customs strategy remains partially in place:
- The 10% basic duty remains in place, although some goods are exempt (copper, energy, pharmaceuticals);
- Cars are subject to a separate 25% duty;
- Canada and Mexico were partially exempted, but the US retained a 25% duty for violation of the USMCA;
- TheEU continues negotiations on zero tariffs, but is preparing mirror sanctions in case of failure.
Ursula von der Leyen welcomed Trump’s move as a “step towards stability”, but noted that the EU is ready to respond in case of a breakdown in negotiations.
What happens after 90 days?
The White House has only three months to conclude agreements with more than 70 countries. The most likely scenario is a transition to sectoral regulation, with duties only on certain products and industries.
Allie Renison, a former adviser to the British government, believes that:
“Global duties are too complex to manage. It would be more appropriate to regulate tariffs on a point-by-point basis.”
Why is it risky even after the “truce”?
Economists believe that the biggest threat is not the duties themselves, but the unpredictability. Investors do not believe that Trump will stick to even a temporary agreement.
“The effects of uncertainty may be as great as the effects of the duties themselves,” says Nicolò Tamberi of the University of Sussex.
Some investors and companies are already postponing their investment decisions, waiting to see how things develop after the 90-day period.
