Highlights
- President Trump suspends global tariffs for 90 days
- Dramatic increase in tariffs on China to 125%
- Stock markets surge in response
- Dow jumps 7.2% with tech stocks leading the rally
- Strategy aims to:
- Isolate Beijing
- Realign global supply chains
- Pressure China through economic confrontation
In a dramatic escalation of his trade war strategy, President Donald Trump has announced (opens in a new tab) a 90-day suspension of all tariffs on countries except China—effectively declaring an economic war on the world’s second-largest economy. The move is intended to isolate Beijing and rally global supply chains away from Chinese dominance, particularly in critical sectors like semiconductors, clean energy, and rare earths. While billed as a temporary reprieve for allies and neutral trade partners, the action underscores Trump’s intention to confront China unilaterally, weaponizing tariffs to accelerate decoupling and punish what the administration calls “predatory industrial behavior.” The announcement has already triggered global market volatility and could set the stage for retaliatory moves from China, including further export restrictions on key strategic materials.
American stock markets are now surging again, and the rollercoaster ride that is associated with the Trump administration ensues.
Stocks soared on April 9, 2025, marking the biggest rally in five years after President Donald Trump announced a 90-day pause and rollback of most global tariffs to a 10% baseline—excluding China, which now faces a sharply increased 125% tariff. The Dow surged 2,711 points (7.2%), the S&P 500 jumped 8.5%, and the Nasdaq leapt 10.8%, led by major tech and retail stocks like Nvidia, Apple, and Tesla. While markets celebrated the temporary relief, analysts warned the pause is not a permanent resolution, especially with China now isolated in an increasingly confrontational trade posture. Treasury Secretary Scott Bessent, who will lead negotiations, confirmed sector-specific tariffs remain in place.
Trump’s aggressive trade maneuver—slashing tariffs for all countries except China while hiking China’s to 125%—unleashes a high-stakes, multi-dimensional strategy with far-reaching consequences:
- Global Trade Realignment – by giving every country but China a 90-day tariff reprieve, Trump is effectively trying to isolate Beijing and forge a new anti-China economic bloc. This could accelerate friendshoring—the redirection of supply chains to U.S.-friendly countries—and deepen trade alliances with nations like India, Mexico, and Vietnam.
- De Facto Economic War with China – raising tariffs on China to 125% is tantamount to a declaration of economic war. It could trigger retaliatory measures from Beijing, including bans on rare earth exports, restrictions on U.S. firms operating in China, or even actions targeting the U.S. dollar’s standing in global trade.
- Market Volatility and Inflation Risk – while markets rallied on the temporary tariff pause, the long-term uncertainty could fuel volatility. If tariffs are reimposed after 90 days or if China retaliates harshly, supply chains could be disrupted again, reigniting inflationary pressures—especially on consumer electronics, vehicles, and energy technologies.
- Reshoring Pressure and Industrial Policy Surge – Trump’s strategy will likely drive a new wave of domestic manufacturing and energy supply chain development. Expect a surge in industrial policy tools: tax breaks, subsidies, and fast-track permitting, especially in critical sectors like semiconductors, EVs, and rare earths.*
- Strategic Leverage for Negotiation – Trump is using the global pause as a bargaining chip—offering tariff relief to allies while daring China to respond. It’s a classic Trump move: create chaos, then offer deals. Whether it brings meaningful trade realignment or sparks a global economic backlash depends on how both allies and adversaries respond, suggests Rare Earth Exchanges.
Trump’s approach could trigger a global realignment of trade, a manufacturing renaissance—or a costly breakdown in the global economy, depending on how the next 90 days play out.
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