US President Donald Trump has announced a pause on much of his so-called "reciprocal" tariffs, while raising the rate against China further to 125 per cent.
The abrupt backdown in the face of a global market meltdown sent US stocks soaring in what was seemingly an attempt to narrow what had been an unprecedented trade war between the US and most of the world to a showdown between the US and China.
In a Truth Social post early this morning he said he had authorised a "90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately".
But he hit out at China for what he called a "lack of respect that China has shown to the World's Markets" in justifying yet another tax increase on goods coming from Beijing.
"At some point, hopefully in the near future, China will realise that the days of ripping off the USA, and other countries, is no longer sustainable or acceptable," he said.
It comes less than 24 hours after White House press secretary Karoline Leavitt said the president would not back down on tariffs.
"President Trump has a spine of steel, and he will not break," she told reporters yesterday. "The Chinese want to make a deal, they just don't know how to do it."
Treasury Secretary Scott Bessent said Trump would keep the 10 per cent so-called "baseline" tariff on most countries.
The 10 per cent figure had been applied to Australia and several other countries based on the US' trade surplus with them but was meaningfully lower than the 20 per cent tariff Trump had set for goods from the European Union, 24 per cent on imports from Japan and 25 per cent on products from South Korea.
Still, 10 per cent would represent an increase in the tariffs previously charged by the US government.
The significant backdown came after China further lifted its retaliatory tariffs on US goods from 34 per cent to 84 per cent and European Union countries voted in favour of 25 per cent charges on $US23 billion ($38 billion) in goods coming from the US.
China had last night vowed to "fight to the end" in an escalating trade war with the US, as it announced it would raise tariffs on American goods to 84 per cent from today.
The escalations came after the tariff introduction hit markets in Australia and around the world and Treasurer Jim Chalmers had an emergency meeting with Reserve Bank of Australia governor Michele Bullock.
Beijing added an array of countermeasures after US President Donald Trump raised the total tariff on imports from China to 104 per cent.
It was yet to react to the latest Trump tariff hike adding further 21 percentage points.
"If the US insists on further escalating its economic and trade restrictions, China has the firm will and abundant means to take necessary countermeasures and fight to the end," the Ministry of Commerce wrote in a statement introducing its white paper on trade with the US.
The Chinese government declined to say whether it would negotiate with the White House, as many other countries have started doing.
On Friday, China announced a 34 per cent tariff on all goods imported from the US, export controls on rare earths minerals, and a slew of other measures in response to Trump's "Liberation Day" tariffs.
Trump then added an additional 50 per cent tariff on goods from China, saying negotiations with them were terminated.
Panic on Wall Street as Trump announces new tariffs
So far, China has not appeared interested in bargaining.
"If the US truly wants to resolve issues through dialogue and negotiation, it should adopt an attitude of equality, respect and mutual benefit," Ministry of Foreign Affairs spokesman Lin Jian said.
The paper says that the US has not honoured the promises it made in the phase 1 trade deal concluded during Trump's first term. As an example, it said that a US law that would ban TikTok unless it is sold by its Chinese parent company violates a promise that neither would "pressure the other party to transfer technology to its own individuals".
Trump last week signed an order to keep TikTok running for another 75 days after a potential deal to sell the app to American owners was put on ice. ByteDance representatives called the White House to indicate that China would no longer approve the deal until there could be negotiations about trade and tariffs.
The paper also argued that taking into account trade in services and US companies' domestic Chinese branches, economic exchange between the two countries is "roughly in balance".
It says that China had a trade in services deficit with the US of $US26.57 billion ($44 billion) in 2023, which is composed of industries like insurance, banking and accounting. Trump's tariffs were designed to close trade deficits with foreign countries, but those were calculated only based on trades in physical, tangible goods.
"History and facts have proven that the United States' increase in tariffs will not solve its own problems," said the statement from the Chinese commerce ministry.
"Instead, it will trigger sharp fluctuations in financial markets, push up US inflation pressure, weaken the US industrial base and increase the risk of a US economic recession, which will ultimately only backfire on itself."
EU imposes new tariffs in retaliation
Before Trump's backdown, the European Union said its tariffs would go into effect in stages, with some on April 15 and others on May 15 and December 1. The EU executive commission didn't immediately provide a list of the goods.
Members of the 27-country bloc repeated their preference for a negotiated deal to settle trade issues
"The EU considers US tariffs unjustified and damaging, causing economic harm to both sides, as well as the global economy," they said.
"The EU has stated its clear preference to find negotiated outcomes with the US, which would be balanced and mutually beneficial."
The head of the EU's executive commission, Ursula von der Leyen, has offered a zero-for-zero tariffs deal on industrial goods including cars. But Trump has said that's not enough to satisfy US concerns.
The EU was also yet to comment on Trump's latest tariff pronouncement.
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