Trump’s Abrupt Tariff U-Turn: Global Rates Slashed to 10%, China Hit with 125% Levy

Washington D.C. – In a dramatic and unexpected policy reversal, President Donald Trump on Wednesday, April 9, 2025, significantly altered his administration’s trade posture just hours after new tariffs took effect. The move saw a substantial reduction in the so-called “reciprocal tariffs” for a majority of nations, lowering them to a blanket rate of 10% for a period of 90 days. This new 10% figure is applied in addition to previously established duties, including the standing 25% tariffs already imposed on imported cars, steel, and aluminum.

However, the global tariff reduction did not extend to China. Beijing was specifically excluded from this temporary relief and instead faced a dramatic escalation in duties. In direct retaliation for China enacting an 84% levy on U.S. goods earlier the same day, Wednesday, April 9, 2025, the United States hiked the total tariff on Chinese imports to 125%.

The Sudden Shift in Policy

The decision, announced with little prior warning, marked a stark pivot from the protectionist measures the administration had been implementing. The “reciprocal tariffs,” a term used by President Trump to describe duties mirroring those imposed by trading partners on U.S. goods, had just gone into effect when the White House declared their immediate reduction for most countries. The new 10% rate offers a temporary reprieve, set to expire after 90 days, prompting businesses and trading partners to scramble to understand the implications and duration of this shift.

The previous tariff structure had drawn widespread criticism and concern from industries reliant on imports, as well as from international allies. The 10% reduction, while temporary and still adding to existing duties like the 25% on cars, steel, and aluminum, was immediately interpreted by many as a sign of potential de-escalation in trade tensions with various partners, albeit excluding one major player.

China Faces Steep Escalation

Beijing’s imposition of an 84% tariff on U.S. goods on Wednesday served as the explicit trigger for the punitive 125% U.S. tariff on Chinese products. This move pushes the total tariff burden on goods from China to an exceptionally high level, representing a significant intensification of the trade conflict between the world’s two largest economies. The 125% rate is among the highest tariffs imposed by the U.S. in recent history, underscoring the depth of the current bilateral trade dispute.

Trade analysts suggest that a tariff rate of 125% is likely to have a profound impact on the flow of goods between the two countries, potentially leading to a sharp decrease in U.S. imports from China. This escalation is expected to disrupt supply chains further and could lead to increased costs for American consumers and businesses relying on Chinese-manufactured components or finished goods.

Rationale and Immediate Reactions

Explaining the abrupt shift, President Trump was quoted as stating the decision was made because people were “getting a little bit yippy.” This informal remark offered a glimpse into the pressures potentially influencing the White House’s trade strategy.

Adding a more strategic perspective, Treasury Secretary Scott Bessent characterized the policy change as part of a deliberate plan designed to create “maximum negotiating leverage.” This suggests the tiered approach – lowering tariffs for some while drastically increasing them for China – is intended to isolate Beijing and pressure it into trade concessions.

The announcement had an immediate and positive effect on financial markets. Following days of decline, markets rallied sharply, reflecting investor relief at the broad reduction in tariffs for most countries, despite the significant escalation with China. The temporary nature of the 10% rate and the stark contrast in treatment for Beijing, however, left many observers uncertain about the long-term trajectory of U.S. trade policy.

Internationally, the European Union announced it was pausing its plans for retaliatory tariffs against the United States in response to the partial tariff reduction. This reaction from a key trading bloc indicated that the U.S. move had succeeded, at least initially, in easing tensions with some allies, creating a more fragmented global trade landscape with China now facing distinct and exceptionally high barriers.

Looking Ahead

The coming 90 days will be crucial in determining whether the 10% tariff reduction becomes permanent or is merely a temporary measure. Similarly, the 125% tariff on China is expected to be a central point of contention in any future trade negotiations between Washington and Beijing. The bifurcated approach signals a potential shift in the administration’s trade tactics, moving away from broad-based tariffs towards more targeted pressure on specific adversaries like China, while offering temporary relief to other partners.

Businesses worldwide are now assessing the implications of this complex and rapidly evolving trade environment, navigating disparate tariff rates and the uncertainty introduced by the sudden policy changes on Wednesday, April 9, 2025.