After insisting the tariffs President Donald Trump imposed in his “Liberation Day” announcement last week were “here to stay,” Trump reversed himself this week.
Trump announced a three-month pause on all those “reciprocal” tariffs he announced. The lone exception: China. Not only did he not pause those tariffs, he said they will be increased to 125% from 104% after China announced additional retaliatory tariffs against the United States Wednesday.
All other countries that were subjected to reciprocal tariff rates Wednesday will see rates go back down to the universal 10% rate, he said.
“Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately,” Trump said in a social media post. “At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable,” he wrote.
“Nothing’s over yet, but we have a tremendous amount of spirit from other countries, including China,” Trump told reporters Wednesday. “China wants to make a deal, they just don’t know how quite to go about it.”
According to a report from CNN, quoting a White House official, Mexico and Canada won’t face the 10% tariffs, a White House official told CNN. Almost every good coming from the two nations will continue to be tariffed at 25%, unless they are compliant with the US-Mexico-Canada Agreement, in which case they won’t face tariffs. However, that does not apply to sector-specific tariffs Trump has imposed.
Wall Street breathed a sigh of relief, however, that Trump was backing down on other extreme trade measures. Stocks rallied sharply on the news – even though the 10% universal tariff on all imports coming into the United States remained in effect.
The Dow surged nearly 3,000 points or 7.87%, on Wednesday, according to published reports. The S&P 500 was up 9.5%. The tech-heavy Nasdaq soared 12.2%. The gains marked the best day for the S&P 500 since October 2008, according to the CNN report.
The pause may not help the U.S. automotive industry, which remains under stress, analysts and industry executives say.
It also didn’t change the 25% tariffs instituted on imported vehicles, steel or aluminum under Section 232 of the Trade Expansion Act of 1962 as well as the 25% duty on auto parts that’ll begin to be collected on May 3.
“We’re still in a lot of turmoil,” said Glenn Stevens, executive director of MICHauto, the automotive arm of the Detroit Regional Chamber, told The Detroit News. “We’re still hoping the automotive sector will be excluded from these strategic tariffs and utilize the USMCA. We’re still hoping that is going to be renegotiated.”
The pause did nothing to negate the on-again, off-again nature of trade policy being deployed by Trump. Michigan Gov. Gretchen, during a speech in Washington, criticized the scattered policy before meeting with Trump.
In an interview with journalist Gretchen Carlson, Whitmer said businesses “want certainty.”
“Right now, when the rules are changing literally day by day, no company is going to be able to invest hundreds of millions or billions of dollars … much less make decades-long investments, because you don’t know what the rules are,” she told Carlson. “And because of that, we’re going to see contraction. We’re going to see paralysis. And it’s going to lead to job losses and higher costs for people.”
Whitmer wants a tariff exemption for autos and energy. “We’re already seeing the impacts of tariffs,” she said. “Auto companies are stockpiling parts and laying off workers. Suppliers are facing higher costs and delaying expansions. Dealerships are forced to raise prices by up to $15,000 amid slowing sales, and since every single auto job supports three others in the community, the impact is being felt by all of us.”
