Donald Trump stunned markets Wednesday with another quick pivot on trade, announcing he would authorize a 90-day pause on his reciprocal tariff plans for all countries except China and telling reporters he did so because people were getting “yippy” and “afraid.”
“They were getting a little bit yippy, a little bit afraid,” he said Wednesday, referring to the market unrest that unfolded following his “Liberation Day” tariff announcement a week ago.
The benchmark S&P 500 (^GSPC) roared up over 9.5% in the biggest increase since 2008.
It was a move that Trump says came together early Wednesday morning after he had been considering it in recent days.
“We decided to pull the trigger and we did it today and we are happy about it,” he said. “If you keep going, you are going to be back to where it was four weeks ago,” he added.
The sharp move upward in markets came after Trump paused many tariffs but kept 10% baseline duties in place that came into effect last weekend for all countries.
That baseline does not apply to Mexico or Canada, which still face a separate set of duties related to fentanyl. Separate industry-specific tariffs on steel, aluminum, autos also remain unchanged.
Read more: The latest news and updates on Trump’s tariffs
The president’s pause of “reciprocal” tariffs has one notable exception: China. Trump announced he would be unilaterally raising the rate on China further to 125% because of “the lack of respect that China has shown.”
Trump additionally floated an idea Wednesday afternoon that he might consider exempting some US companies from the tariffs, saying those decisions would be made “instinctively.”
President Donald Trump speaks to reporters before Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick in the Oval Office on April 9. (Anna Moneymaker/Getty Images) ·Anna Moneymaker via Getty Images
It was another chaotic move in Trump’s ever-shifting tariff plans and came less than an hour after Treasury Secretary Scott Bessent told reporters that the president’s decision had nothing to do with the turmoil in both the stock and bond markets of the past week, saying that “this was his strategy all along.”
Trump was pressed on the apparent contradiction and how many aides had previously said this was not a negotiation by saying “sometimes it’s not a negotiation until it is.”
More than 75 countries have contacted the US to start talks on the reciprocal tariffs, Trump and his aides say, with Trump’s team promising that the 90-day pause that will allow the US to create a “bespoke” solution for all of them.
But Trump seemed to acknowledge the market reaction was part of his calculus for announcing the pause, saying he noticed last night in the bond market that “people were getting a little queasy” and “you have to be flexible.”
Treasury Secretary Scott Bessent speaks to reporters outside the West Wing of the White House, on Wednesday. (AP Photo/Jacquelyn Martin) ·ASSOCIATED PRESS
The move puts also even more focus on China as the White House appears to try to isolate the world’s second-largest economy by beginning talks with China’s neighbors while continuing to raise duties faced by China itself.
Read more: What Trump’s tariffs mean for the economy and your wallet
“China is the most imbalanced economy in the history of the world,” Bessent added to reporters Wednesday afternoon, calling it the “biggest source” of US trade troubles.
Wednesday’s move will also lower duties on the European Union from a rate of 20% to the 10% baseline that went into effect on April 5. That lessening comes even as the group approved their own retaliatory tariffs earlier Wednesday but Trump says they will get a reprieve because those duties hadn’t gone into effect yet.
“These Countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately,” Trump said in his initial post announcing the move.
Terry Haines of Pangaea Policy added in the immediate aftermath of the news that another fact that could be boosting markets is that “Bessent is the main adviser, while [Commerce Secretary Howard] Lutnick is in charge of the negotiating details, something that’s likely soothing to the Street.”
It was a partial reversal of what economic observers warned could move pocketbooks, with a new Yale Budget Lab study released Tuesday estimating that the tariffs could push prices up by 2.3% and translate to an average of $3,800 more in costs this year for families.
Around the world, 185 countries have been impacted by 10% duties implemented last weekend, and those duties appear set to continue.
Trump and his aides have repeatedly touted the sheer number of countries that have called to negotiate, with Bessent saying they are “overwhelmed.”
Japan, South Korea, and Vietnam are apparently first in line with talks commencing this week. Other talks could drag out for weeks or months with the timeline unclear, especially if they will be finished before the 90-day pause ends in July.
As for the path ahead for still jittery markets, Bessent added Wednesday that “the only certainty we can provide is that the US is going to negotiate in good faith.”
Ben Werschkul is a Washington correspondent for Yahoo Finance.
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