US suspends reciprocal tariffs for 90 days, raises tariffs on China to 125%

US President Trump announced on the afternoon of April 9 that some countries and regions will be allowed to suspend the additional part of the reciprocal tariffs that were just implemented on the same day for 90 days. The 10% unified tariff imposed on April 5 remains unchanged. The measure will be implemented immediately, including Japan. On the other hand, the tariff will be raised to 125% for China, which has taken retaliatory measures.

Trump posted the above news on his SNS account. The US market fell into a “three-fall” situation on the 9th. From the morning, stocks, currencies, and bonds fell together. The US government was forced to revise its policy just over 13 hours after the tariff measures were launched. The Trump administration seems to want to force hesitant countries and regions to make concessions instead of retaliating by clearly distinguishing the response measures.

The US government imposed a unified 10% additional tariff on global imported goods on the 5th, and launched the additional part allocated by country and region on the 9th. The total additional tariffs on goods imported from Japan reached 24%. For countries and regions that agree to negotiate, this tax rate will be uniformly reduced to 10%. The European Union (EU), which has imposed a total of 20% tariffs, will also reduce it to 10%.

The tariffs introduced by categories such as steel products, aluminum, and automobiles will remain unchanged.

Trump said that more than 75 countries have proposed negotiations with the United States on trade barriers, tariffs, currency operations, etc. At the same time, he said that the condition for suspension is that no retaliatory measures are taken against the United States.

The United States will take a tougher stance on China. The US government has launched an additional tariff of 84% on Chinese products since 0:00 am on the 9th. A total of 20% additional tariffs have been imposed from February to March, and the cumulative additional tariffs have reached 104%.

The Chinese government announced on the 9th that it would impose an additional tariff of 50% on goods imported from the United States. Together with the 34% retaliatory tariffs that have been announced, the tax rate has reached 84%.

Trump posted on SNS on the afternoon of the 9th, “In view of China’s lack of respect for the global market, it will announce an increase in tariffs to 125%.” Critics said that the reason for the stock market crash was China’s retaliatory measures. 125% is the cumulative additional tariff rate including 20% ​​from February to March.

Trump answered questions from the media at the White House that afternoon. He explained that the reason for revising the tariff policy was, “I think people have gone too far,” and said that this was to respond to growing concerns. He mentioned, “The bond market is very complicated, but it’s beautiful now,” implying that market stability is a priority.

Trump said that future rescue measures for large companies that have been hit will also be “considered after a while,” and emphasized that “flexibility must be maintained.”

According to data from the research firm Pantheon Macroeconomics, the average tariff rate outside China will be reduced from 22% to 14% through this measure. Despite this, it is still a significant increase compared to 3% at the beginning of the year. The overall tariff rate, including China, is expected to be 17%. This may push up consumer prices by 1% and is likely to slow the US economic growth rate.

Since this measure only imposes extremely high tariffs on Chinese products, the trend of importing Chinese products through other countries and regions may intensify in the future. The equivalent tariff rates for each country based on the amount of trade deficit have also been criticized, and the instability of the policy has become increasingly prominent.

At the White House, almost at the same time as Trump issued the article, US Treasury Secretary Bessant held a press conference with the presidential spokesman. This is the first time that the Treasury Secretary has come forward to explain the tariff policy.

Bessant is considered a moderate in the US government and is responsible for the negotiations with Japan. There was a view that the previous increase in tariffs had been led by Trump’s confidants such as Navarro, a hard-line senior presidential adviser.

Bessant said, “President Trump’s negotiation strategy was successful a week before (the announcement of reciprocal tariffs),” and commented that 75 countries joined the negotiation team because of Trump’s tough tariff policy. He also said, “It takes a lot of courage for him to stick to the policy until this moment,” and praised this for benefiting from Trump’s negotiation skills. Bessant also said, “Japan is at the forefront, they will send a negotiation team, and we will wait and see.”