Donald Trump tariff war: 90-day pause on higher tariffs announced, China hit with 125 per cent rate

US President Donald Trump has spectacularly backflipped on his newly announced higher tariffs, granting a 90-day pause for most countries while escalating a trade war with China.

The United States and China have entered a concerning and escalating trade war after Mr Trump announced a 34 per cent tariff on Chinese imports to the US on “Liberation Day”.

In response, China raised US tariffs to 67 per cent, with Mr Trump quickly firing back to raise his tariff for China to 104 percent.

Now, after another 24 hours, Mr Trump says China’s tariff rate will now be 125 per cent.

Making the announcement on Truth Social, Mr Trump said: “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 per cent, effective immediately.

“At some point, hopefully in the near future, China will realise that the days of ripping off the USA, and other Countries, is no longer sustainable or acceptable.”

While slapping the People’s Republic with the escalated rate, Mr Trump said he had authorised a 90-day pause on higher tariffs (above his 10 per cent baseline tariff) for other countries.

“Conversely, and based on the fact that more than 75 countries have called representatives of the United States, including the Departments of Commerce, Treasury, and the USTR, to negotiate a solution to the subjects being discussed relative to trade, trade barriers, tariffs, currency manipulation, and non monetary tariffs, and that these countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorised a 90-day PAUSE, and a substantially lowered reciprocal tariff during this period, of 10 per cent,” he wrote.

“Effective immediately.”

Speaking from the Oval Office, Mr Trump said China’s President Xi is his “friend” and that he respects him.

He went on to say that he didn’t blame China for the current trade issue that he claims has hurt the United States, instead blaming “stupid” former US Presidents for allowing the the country to be taken advantage of by others.

A 10 per cent 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 auto, steel and aluminium that are already in place.

US stock indexes shot higher on the news, with the benchmark S&P500 up more than six per cent. Bond yields came off earlier highs and the dollar rebounded against safe-haven currencies.

Earlier on Wednesday, China and the European Union announced new trade barriers on US goods in response to the already-steep duties imposed by Mr Trump, escalating a global trade war that has hammered markets and raised the likelihood of recession.

China announced a tariff hike on US imports to 84 per cent from 34 per cent hours after Trump’s punitive 104 per cent tariff kicked in.