Paul Wiseman and Christopher Rugaber, AP Economics Writers
WASHINGTON (AP) — President Donald Trump made another jarring reversal in America’s trade policy on Wednesday, escalating a trade war with China while halting the 90-day import tax he imposed just 13 hours ago in dozens of countries. The move sparked a strong stock market rally on Wall Street, but has baffled businesses, investors and American trading partners about what the president is trying to achieve.
The U-turn comes after a global tariff cleaning that announced last week that Trump launched a four-day route in global financial markets, numbing businesses and raising fears that the US and the global economy would fall into a recession.
White House Press Secretary Caroline Leavitt sought to characterize a sudden change in policy as part of an epic negotiation strategy. But to people outside the Trump administration, it looked like a cave against growing fear that tariffs, the impulsive use of market pressure and import taxes — would cause massive collateral economic damage.
“We are pleased to announce that we are a great source of service,” said Daniel Russell, vice president of the Asian Association’s Policy Research Institute. “The administration’s blunt tactics rattle allies who viewed a sudden turnover after a market meltdown as damage control, rather than a pivot towards respectful, balanced negotiations.”
Trump’s Turnaround Wednesday concluded the wild week of US trade policy. Wednesday, April 2nd – Trump labeled it as “Liberation Day” – the president has overturned the global trading system by announcing plans to impose tariffs on almost every country in the world.
In the middle of the night Wednesday, he raised the ante by slap what he called “mutual taxes” on countries accused of unfair trading practices and adding a US trade deficit. These are tariffs suspended for 90 days, saying that they would give the country time to negotiate with him and his trading team.
There was one exception to the grace. He punished Beijing for raising tariffs on Chinese imports to an astounding 125% and announcing retaliation fees in the US. Meanwhile, the 10% baseline tariff (which itself is a substantial act of protectionism) remains intact.
Companies cut and delay plans
Trump’s ever-changing trade tactics, including previous taxation in cars, iron, aluminum, Mexico and Canada, have already caused damage, delaying or canceling plans for Dazed companies as they tried to understand what Trump is doing and how they should respond.
After Trump’s extensive tariffs were announced, some companies temporarily fired workers, but there were signs that many companies had curbed employment amid the widespread uncertainty that tariffs created.
Carmaker Stellantis temporarily cut 900 jobs at its Michigan and Indiana plants after production halted on two plants in Canada and Mexico.
And Cleveland Cliffs responded to declining demand from auto companies at its Michigan factory and Minnesota iron ore mines. Cleveland-Cliffs said production will resume at two facilities after automobile production returns to the US
Minutes from the Federal Reserve March 18-19 meeting released Wednesday showed that many of its policymakers said their business contacts “reported a suspension of employment decisions due to rising policy uncertainty.”
And Delta Air Lines said on Wednesday that demand for leisure and corporate travel has stagnated domestically due to uncertainty over global trade. During a conference call with investors, the company said it was cutting capacity. They were also denied providing full-year financial forecasts.
“It’s hard to know how this will unfold now, given that it’s somewhat spontaneous,” said Delta CEO Ed Bastian. “I hope that sanity will win and we will proceed through this period relatively quickly in terms of global trade.”
I’m desperately looking for clarity on Trump’s tariffs
For weeks, businesses have been more clear about Trump’s ultimate tariff policy. It is not clear that the 90-day suspension reduced uncertainty.
Jeff Jagli, CEO of New Jersey-based importer/exporter Jaglo, said Trump’s true social post on Wednesday was even more confused by “even worse.”
“We are in a hurry to find the correct information and steps for the entries we are currently processing in real time,” he said in an email. He was unable to find guidance on the White House or Customs and Border Protection Agency website that collects customs duties.
Trump’s trade war with China escalates
Trump’s tariffs have sparked a tough trade war with China, the world’s second largest economy. Even before Trump raised taxes on China to 125%, Chinese people had set their own tariffs on the US at 84%.
World Trade Organization Director Ngozi Okonjo-Iweala warned that rising tensions cut US-China’s commodity trade by 80%, “severely damaging the global economic outlook.”
“One of particular concern is the potential fragmentation of global trade along geopolitical lines,” she wrote in a statement late Wednesday. “Dividing the global economy into two blocks could reduce long-term reductions in real world GDP by almost 7%.”
Citing WTO forecasts, she warned that the negative effects could ripple over other economies, particularly developing economies. She urged the country to ensure an open global trading system and resolve differences through cooperation.
Meanwhile, US companies have struggled to understand how to deal with the huge taxation of Chinese products they can count on.
Jessica Bettencourt is CEO of Klem’s, a third-generation store in Spencer, Massachusetts, and sells everything from lawn and garden items to workwear and gifts. She said that the escalation of tariffs from China has forced her to stop ordering new fourth quarter products, which are holidays, gifts or toys. She is also reconsidering autumn apparel and footwear orders that are not yet in place.
“The worst is uncertainty and we have a great uncertainty,” said Jason Goldberg, chief commercial strategy officer at Publicis Groupe, a global marketing and telecommunications company. “No one can move. Everyone is trying to save a lot of cash and postpone unnecessary expenses. People are being fired. Orders have been cancelled. Plans for expansion are pending.”
Robert Bampstead and Anne de Inosio of New York, Dee Anne Durbin of Detroit, and Jamie Keaten of Geneva contributed to the story.
Original issue: April 9, 2025, 6:38pm EDT
