Trump pauses ‘reciprocal’ tariffs, but hits China harder

Trump said Wednesday that his 10%, baseline tariff on virtually all imports would stay in effect. But he implemented a 90-day pause for the higher rates he had placed on nations the administration views as “bad actors" on trade—except for China. In an early afternoon social-media post, Trump wrote that he had raised the tariff imposed on China to 125%, “effective immediately."

An administration official said that Canada and Mexico would remain exempt, for now, from the 10% baseline global tariff. While America’s neighbors remain subject to plans to impose 25% tariffs on most imports to the U.S. for what Trump says is their role in fueling the fentanyl crisis, an exemption is still in place for these levies on autos and many other goods compliant with the U.S.-Mexico-Canada trade agreement.

At the 4 p.m close, the Nasdaq roared ahead 12%, the S&P 500 added 9.5% and the Dow Jones Industrial Average moved 7.9%, or 2,962 points higher.

Trump said that he decided to pause the bulk of his reciprocal tariff program because of growing concern about the economy. “They were getting yippy," Trump said when asked why he enacted a temporary rollback. “They were getting a little bit yippy, a little bit afraid."

The tariff pause now opens up a 90-day sprint for trading partners to offer Trump deals to reduce their tariffs.

President Trump said many countries had come forward to make deals with the U. S.—including China.

“Nothing is over yet," Trump said, adding that somebody needed to take the steps that he took to rebalance global trade in America’s favor. He said many countries had come forward to make deals with the U. S.—including China.

“China wants to make a deal," said Trump, who added that the Chinese were proud people and were determining how to make a deal with the U.S.

The reversal on tariffs shocked even some allies close to Trump. “It was a big-time surprise to a lot of people," said Sen. Jim Justice (R., W. Va.), a longtime Trump friend, adding that “I love what it’s done to Wall Street."

Some Democrats criticized the rapid swings in U.S. policy. “Trump is creating giant market fluctuations with his on-again, off-again tariffs," Sen. Adam Schiff (D., Calif.) wrote on X. “These constant gyrations in policy provide dangerous opportunities for insider trading. 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?"

Trump, an avid consumer of cable news, told reporters that he watched JPMorganChase CEO Jamie Dimon’s interview on Fox Business earlier Wednesday morning. During the interview, Dimon said a recession was a “likely outcome" of the new tariffs but defended the idea of tariffs as a way to improve trade. He urged Trump to give Treasury Secretary Scott Bessent time to make deals. “I’m taking a calm view, but it could get worse," Dimon said.

Also this morning, Trump posted on Truth Social: “THIS IS A GREAT TIME TO BUY!!!"

The about-face was greeted with glee by most Senate Republicans, many of whom were at a caucus luncheon together when Trump announced the pause on Truth Social. The reaction in the room was positive, Sen. James Lankford (R., Okla.) said with a smile, adding that the pause “sounds like good news to me."

In the aftermath of the decision, many Republican senators reiterated Bessent’s line that imposing tariffs and then pulling them back was the strategy all along. “The president is a master negotiator," Sen. Bernie Moreno (R., Ohio) said.

But some of the more vocal critics of Trump’s tariffs were not so sure.

“I’m not sure this was gamed out," said Sen. Thom Tillis (R., N.C.). “Whether or not this was in the playbook or a reaction, I don’t know."

The surprise in the tariff shift appeared to extend to U.S. Trade Representative Jamieson Greer, who was testifying in front of the House Ways and Means Committee when Trump posted the announcement. That prompted a fiery response from Democrats on the committee, who demanded to know if Greer knew about the pullback ahead of time, and if so, why he didn’t mention it during his hours of testimony.

Greer responded that he was aware that discussions on a tariff pause were taking place, but wouldn’t divulge any more details about his conversations with the president or the rest of the cabinet. Sen. Bill Hagerty (R, Tenn.), a close Trump ally, said he met with Greer on Wednesday morning, but the trade chief didn’t mention any plans for a tariff pause—though Hagerty stressed he found that laudable, as Greer wouldn’t want to get ahead of the president.

Trump said Wednesday that he was watching the bond market closely as he decided to pause the reciprocal tariffs. “The bond market right now is beautiful," Trump said, talking to reporters at the White House. “I saw last night where people were getting a little queasy."

Trump’s announcement of a tariff delay immediately turned the bond market upside down. Longer-term yields, which had been surging based on generalized fear about the fallout from tariffs, were down after his announcement. Yields on short-term notes, which had been relatively stable, shot higher, reflecting a sharp decline in the prices of the bonds. That was welcome news to lawmakers such as Tillis.

“You take a look at Treasury yields…things were not moving in the right direction," Tillis said, “and some things could have combined for a really unpleasant outcome."

Hagerty, who helped negotiate a trade deal for Trump as his first-term ambassador to Japan, said he had heard from many governments keen to strike economic pacts with the president.

The president will likely have a high bar for such deals, Hagerty said, saying that foreign nations should be ready not only to reduce their own tariffs, but cancel their non-tariff barriers to U.S. products, make commitments to purchase U.S. exports, and outline plans to invest in U.S. manufacturing.

Write to Gavin Bade at gavin.bade@wsj.com