US President Donald Trump said yesterday he would temporarily lower new tariffs on many countries, even as he raised them further on imports from China, in a sudden reversal that sent US stocks sharply higher.
Trump’s announcement came less than 24 hours after steep new tariffs kicked in on imports from dozens of trading partners. The new trade barriers have hammered markets, raised the odds of recession and prompted retaliatory responses from China and the European Union.
Trump said he would raise the tariff on Chinese imports to 125 per cent from the 104pc level that took effect at midnight, further escalating a high-stakes confrontation between the world’s two largest economies.
Trump said he would at the same time suspend targeted tariffs on other countries for 90 days to allow time for US officials to negotiate with countries that have sought to reduce them.
He acknowledged that people were getting “a little bit afraid” about the tariffs and were “jumping a bit out of line,” but repeated his belief that trade deals would be reached with many countries eventually, including China.
“China wants to make a deal. They just don’t know how quite to go about it... President Xi (Jinping) is a proud man... They don’t know quite how to go about it, but they’ll figure it out,” he said.
A 10pc blanket duty on almost all US imports will remain in place, the White House said. The announcement also does not appear to affect duties on cars, steel and aluminium that are already in place. US stock indexes shot higher on the news, with the benchmark S&P 500 up more than 6pc. Bond yields came off earlier highs and the dollar rebounded against safe-haven currencies.
Goldman Sachs cut its probability for a recession back to 45pc after Trump’s move, down from 65pc, saying the tariffs left in place were still likely to result in a 15pc increase in the overall tariff rate.
US Treasury Secretary Scott Bessent said the administration needed time to negotiate with more than 75 countries that had reached out and suggested Trump had used the tariffs to create “maximum negotiating leverage for himself.”
“This was his strategy all along,” he told reporters at the White House. “And you might even say that he goaded China into a bad position. They responded. They have shown themselves to the world to be the bad actor.”
l The performance of stock market indicators in Arab markets varied during trading yesterday without a clear direction, amid growing concerns in global markets following the US move to impose 125 per cent tariffs on China.
Stock indices in Saudi Arabia, Dubai and Qatar turned upward after initially declining at the opening, while the FADX 15 index in the Abu Dhabi Securities Exchange extended its gains. Meanwhile, declines continued in the stock markets of Kuwait, Bahrain and Muscat.
Economic reports indicated that Gulf stock markets recorded significant losses of $172.2 billion, marking a decline of about 4.2 per cent. The Saudi stock market alone dropped by around 5.9pc, accounting for $154.8bn in losses, while the Kuwaiti market fell by 5.1pc, recording losses of $7.9bn.
Brent crude fell by more than 5pc, dropping below the psychologically significant $60 per barrel level for the first time since February 2021.
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