Trump's "Be Cool" Trade Strategy: 90-Day Tariff Pause Triggers Historic Market Volatility as China Faces 145% Duties
President Donald Trump dramatically shifted U.S. trade policy this week, announcing a 90-day pause on his controversial reciprocal tariffs for most nations while simultaneously hiking tariffs on Chinese imports to an unprecedented 145%. The abrupt policy reversal, which Trump framed as giving trading partners time to "be cool" and negotiate new deals, triggered one of the most volatile weeks in stock market history as investors grappled with the implications of this high-stakes economic gambit.
Key Developments: The "90 Deals in 90 Days" Initiative
In a stunning reversal that rattled global markets, President Trump announced on Wednesday a temporary reprieve from his previously announced reciprocal tariffs, lowering them to a baseline 10% for most countries for 90 days CBS News1. The pause applies to approximately 75 trading partners who, according to Trump, did not retaliate against initial U.S. tariff threats NBC News2.
China, however, was notably excluded from this relief. Instead, the Trump administration confirmed that total tariffs on Chinese imports would rise to 145% when accounting for previous duties already in place CNN3. The White House clarification about the cumulative tariff percentage caused additional market turmoil after initial reports had indicated a 125% rate.
The administration has branded this approach as the "90 deals in 90 days" initiative, an ambitious effort to secure bilateral trade agreements with major trading partners before the tariff pause expires Financial Express4. Treasury Secretary Scott Bessent, who appeared alongside Trump during the Rose Garden announcement, has been tasked with leading negotiations with dozens of countries simultaneously Fox News5.
"I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10 percent, also effective immediately," Trump wrote on his Truth Social platform PBS6. The announcement came after a week of steep market declines following his initial tariff declaration.
Market Reactions: Historic Swings as Investors Process Policy Shifts
The markets responded to Trump's trade policy shifts with some of the most dramatic price swings since World War II. After the announcement of the 90-day pause, U.S. stocks experienced their largest one-day gain in decades, with the S&P 500 surging 9.5% on Wednesday New York Times7. The Dow Jones Industrial Average similarly skyrocketed, closing near an 8% gain NPR8.
However, the euphoria proved short-lived. Just one day later, U.S. stocks plummeted after the White House clarified that China would face a 145% tariff, significantly higher than initially reported. The Dow Jones Industrial Average fell 1,014.79 points, or 2.5%, while the tech-heavy Nasdaq dropped a staggering 4% CNBC9. This dramatic reversal underscored the market's extreme sensitivity to the evolving trade situation.
"This is the most volatile trading environment I've seen in my 30-year career," said Marcus Reynolds, chief investment strategist at Global Capital Partners. "The market is struggling to price in both the short-term impact of these tariffs and the longer-term implications of a fundamental restructuring of global trade" Reuters10.
By Friday, markets had partially recovered, with the Dow climbing more than 600 points as investors expressed hope that countries would reach deals during the 90-day window and that China would limit further retaliatory measures YouTube11.
Global Responses: China Retaliates While Others Rush to Negotiate
China swiftly retaliated against the increased U.S. tariffs, announcing it would raise duties on American goods to 125%, up from the previous 84% Reuters12. The Chinese Finance Ministry described Trump's tariff hikes as a "blatant act of unilateralism and protectionism" that "seriously violates WTO rules."
Interestingly, Chinese financial markets showed relative resilience despite the escalating trade war. Markets in China rose modestly despite the new 145% U.S. tariff, suggesting that Chinese investors may have already priced in a deterioration in trade relations or are confident in the government's ability to manage the economic impact Fortune13.
Meanwhile, other major trading partners are rushing to engage with the U.S. trade team. The European Union, Japan, and South Korea have all announced they are sending delegations to Washington in the coming weeks to begin negotiations Time14. Several nations have expressed cautious optimism about reaching agreements before the 90-day deadline expires.
"We are ready to engage constructively with the United States to avoid a damaging trade war," said European Commission President Ursula von der Leyen. "But we must be clear that Europe will not accept unilateral actions that violate international trade rules" BBC15.
Expert Analysis: Skepticism About Timeline and Economic Impact
Economic experts and Wall Street analysts have expressed significant skepticism about the feasibility of completing numerous complex trade agreements within the compressed 90-day timeframe.
"The idea that the U.S. can negotiate meaningful trade agreements with dozens of countries in just 90 days is wildly unrealistic," said Dr. Jennifer Alvarez, senior fellow at the Peterson Institute for International Economics. "Typical bilateral trade agreements take years, not months, to negotiate" CSIS16.
Wall Street executives have been unusually vocal in their criticism of the tariff strategy. Jamie Dimon, CEO of JPMorgan Chase, reportedly told clients that the administration's approach creates unnecessary uncertainty and volatility Politico17. Several prominent investors have described the tariff policy as "stupidity" that threatens economic growth New York Times18.
Even with the 90-day pause, economists warn of significant inflationary pressure and economic disruption. The American Progress Institute estimates that American households will face an additional $4,600 in annual costs under the new tariff scheme American Progress19. Food prices could rise 4.5%, roughly triple recent grocery inflation rates USA Today20.
Future Implications: Uncertainty Looms Beyond 90 Days
As the 90-day countdown proceeds, businesses and investors face significant uncertainty about what happens after the pause expires. The administration has not clearly articulated what will occur if agreements aren't reached with all trading partners, creating a potential cliff-edge scenario in July.
"Companies can't make investment decisions with this level of policy uncertainty," said Carlos Gutierrez, former U.S. Secretary of Commerce. "The 90-day pause only kicks the can down the road while creating enormous pressure to rush through complex negotiations" Reuters21.
The trade tensions with China appear likely to persist regardless of negotiations with other countries. Trump has repeatedly demanded that Chinese President Xi Jinping call him directly to negotiate, but Chinese officials have indicated they prefer formal diplomatic channels CNN22.
Beyond the immediate market impact, economists are concerned about long-term structural changes to global trade patterns. Some analysts suggest that continued high tariffs could accelerate the "decoupling" of the U.S. and Chinese economies, forcing multinational companies to reorganize their supply chains Economist23.
A High-Stakes Gambit with Global Consequences
President Trump's dramatic tariff pause represents a high-stakes economic gambit that has already generated historic market volatility and reshaped global trade dynamics. As the administration races to secure "90 deals in 90 days," businesses, investors, and global leaders are bracing for continued uncertainty.
The key question remains whether this aggressive approach will yield the favorable trade agreements Trump seeks or instead trigger a protracted global trade war with lasting economic consequences. With the 90-day clock now ticking, the coming weeks will be crucial in determining whether markets should expect a new era of bilateral trade agreements or prepare for even greater economic disruption come July.
