Financial markets have grown used to wild swings, with investors trying to decode the economic impact of Trump’s trade war. In a late-night Truth Social post, former US President Donald Trump unleashed a new wave in his ongoing trade offensive: a 125% tariff on Chinese imports, effective immediately. The declaration, dripping with defiance, landed just hours after global markets reeled from another bout of trade-fueled volatility. With no warning and no diplomacy, Trump drew another red line — sending markets scrambling and world leaders reassessing their next move.
“Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately,” Trump wrote on Truth Social.
The surprise announcement set off fresh tremors across global markets. However, after an initially shaky start, Wall Street clawed its way back. The S&P 500 rose 6.44% by 11 pm IST, rebounding from a 0.5% dip. The Dow Jones Industrial Average gained 5.7%, and the tech-heavy Nasdaq Composite surged 6.6%.
Adding to the sudden turn in tone, Trump said, “At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable.”
He followed the tariff hike with a gesture of limited reprieve. “Based on the fact that more than 75 Countries have called Representatives of the United States... I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately.”
Financial markets have grown used to wild swings, with investors trying to decode the economic impact of Trump’s trade war. On Tuesday, the S&P 500 flipped between a 4.1% gain and a 3% loss — marking the second straight day of extreme reversals.
Meanwhile, global response to US trade moves has not been muted. The European Union approved retaliatory tariffs on US imports including poultry, grains, clothing, and metals. EU officials said these would be suspended only if Washington agrees to a “fair and balanced negotiated outcome.”
The latest escalation came just as Trump’s broader tariff package took effect, including a 104% levy on imports from China. Beijing, quick to counter, announced plans to hike tariffs on US goods to 84% starting Thursday.