WASHINGTON >> Facing a global market meltdown, President Donald Trump on Wednesday abruptly backed down on his tariffs on most nations for 90 days, but raised the tax rate on Chinese imports to 125%.

It was seemingly an attempt to narrow what had been an unprecedented trade war between the U.S. and most of the world to a showdown between the U.S. and China. The S&P 500 stock index jumped sharply after the announcement, but the drama over Trump’s tariffs will now be protracted as the administration engages in prolonged negotiations that suggests a level of uncertainty will persist in the world economy.

Trump posted on Truth Social that because “more than 75 Countries” had reached out to the U.S. government for trade talks and have not retaliated in a meaningful way, “I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately.”

It seemed impossible, as the administration did, to fully deny the pressure created by volatile financial markets that had been pushing Trump to reconsider his tariffs. The pause was announced after the global economy appeared to be in open rebellion against Trump’s tariffs as they took effect Wednesday, a signal that the U.S. president was not immune from market pressures.

Markets rebound

The S&P 500 climbed about 7% in a matter of minutes after Trump’s post, sharply reversing days of severe losses. Nearly every stock in the index rose. Airlines, some tech companies and Tesla were among those companies to soar over 20%. Shares of automakers rose sharply even though 25% tariffs on imported cars remain in place. Ford and General Motors both rose more than 7%.

Asked why he decided to pause the tariffs just hours after imposing them, Trump seemed to acknowledge the market rout that had erased trillions of stock market wealth in recent days.“Well, I thought that people were jumping a little bit out of line,” he said. “They were getting yippy. They were getting a little bit afraid.”

Trump’s change in course also came amid a sharp sell-off in U.S. government bond markets and the dollar, which are typically seen as the safest corner for investors during times of turmoil. Investors large and small had watched trillions in stock market value vanish in a matter of days, and economists increasingly sounded urgent alarms that the United States might be careening toward a recession of its own making.

Asked if the bond market figured into his decision, Trump said he watched as people were getting “queasy.”

“I was watching the bond market; the bond market’s very tricky, but if you look at it now, it’s beautiful,” he said.

10% tariff stands

The 10% tariff was the baseline rate for most nations that went into effect on Saturday. It’s meaningfully lower than the 20% tariff that Trump had set for goods from the European Union, 24% on imports from Japan and 25% on products from South Korea. Still, 10% would represent an increase in the tariffs previously charged by the U.S. government.

Trump raised the tariff on Chinese imports to 125% on Wednesday, hours after China boosted the duty on American goods to 84%.

And the European Union voted Wednesday to approve its first retaliation measures, taking effect in phases starting April 15, and affecting about 21 billion euros ($23 billion) worth of U.S. goods. But EU officials did not respond with an immediate comment on how they might react to Trump’s latest swerve.

Treasury Secretary Scott Bessent said that the negotiations with individual countries would be “bespoke,” meaning that the next 90 days would involve talks on a flurry of deals. Bessent, a former hedge fund manager, told reporters that the pause was because of other countries seeking talks rather than brutal selloffs in the financial markets.

“The only certainty we can provide is that the U.S. is going to negotiate in good faith, and we assume that our allies will, too,” Bessent said.

The Treasury secretary said he and Trump “had a long talk on Sunday, and this was his strategy all along” and that the president had “goaded China into a bad position.”

White House press secretary Karoline Leavitt said the walk-back was part of Trump’s negotiating strategy.

Leavitt said that the news media “clearly failed to see what President Trump is doing here. You tried to say that the rest of the world would be moved closer to China, when in fact, we’ve seen the opposite effect; the entire world is calling the United States of America, not China, because they need our markets.”

Business reaction

Prior to the reversal, business executives were warning of a potential recession caused by his policies, some of the top U.S. trading partners are retaliating with their own import taxes and the stock market is quivering after days of decline.

But market pressures had been building for weeks ahead of Trump’s move, with the president at times suggesting the import taxes would stay in place while also saying that could be subject to negotiations.

Gennadiy Goldberg, head of U.S. rates strategy at TD Securities, said before the announcement that markets wanted to see a truce in the trade disputes.

“Markets more broadly, not just the Treasury market, are looking for signs that a trade de-escalation is coming,” he said. “Absent any de-escalation, it’s going to be difficult for markets to stabilize.”

John Canavan, lead analyst at the consultancy Oxford Economics, noted that while Trump said he changed course due to possible negotiations, he had previously indicated that the tariffs would stay in place.

“There have been very mixed messages on whether there would be negotiations,” Canavan said. “Given what’s been going on with the markets, he realized the safest thing to do is negotiate and put things on pause.”

There still appear to be 25% tariffs on autos, steel and aluminum, with more imports set to be tariffed in the weeks ahead.

On CNBC, Delta Air Lines CEO Ed Bastian said the administration was being less strategic than it was during Trump’s first term. His company had in January projected it would have its best financial year in history, only to scrap its expectations for 2025 due to the economic uncertainty.

“Trying to do it all at the same time has created chaos in terms of being able to make plans,” he said, noting that demand for air travel has weakened.

Reaction in Congress

As news that Trump was backing down on most of his tariffs reached a luncheon of Senate Republicans on Wednesday, the room reacted with relief, cheers and smiles.

House Republican leaders maneuvered on Wednesday to spare their members a politically tricky vote on Trump’s tariffs in the coming months by tucking language into an unrelated measure that would temporarily bar lawmakers from using their power under the law to force such a vote.

This is the second time Republicans have deployed the procedural tactic to sideline Congress on trade matters as lawmakers continue to hear panic from constituents and donors about the adverse effects of Trump’s moves on trade. Last month, they did so as part of a measure needed to bring up a spending bill to prevent a government shutdown.

In a congressional hearing Wednesday, Jamieson Greer, the U.S. trade representative, said he had meetings Tuesday with officials from Europe, South Korea, Ecuador and Mexico, in addition to conversations with countries like the United Kingdom in recent weeks.

He predicted the negotiations would lead to “open markets overseas,” creating a “virtuous cycle” for American manufacturing.

Greer criticized the typical way to negotiate trade deals, describing them as “where you ask others nicely to give you market access and to do a dialogue with you for several years, and at the end, you have no more market access.”

“And then there’s the Trump way,” he added.

As the hearing was nearing its end, Trump sent out his post announcing the pause, which took the gathering by surprise and rippled through the chamber.

“This is amateur hour,” shouted Rep. Steven Horsford, D-Nev. “It looks like your boss just pulled the rug out from under you.” He pressed Greer about whether the move amounted to market manipulation by the Trump administration.

Howard Lutnick, the secretary of commerce, wrote on social media that he had sat beside the president while he wrote the Truth Social post announcing the pause.

“The world is ready to work with President Trump to fix global trade, and China has chosen the opposite direction,” Lutnick said.

This report contains information from the New York Times.