Everyone else down to 10% but China to 125%.
From Trump:
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. 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. 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 authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately. Thank you for your attention to this matter!
There it is.
The are gigantic bids in equities on this. It’s not entirely clear if the EU is covered as they did retaliate but I suspect those ones also go to 10%.
The point here is that it was all a negotiation tactic. This is what many thought would happen before the tariff deadline at midnight.
This puts to sleep the entire ‘reciprocal but not reciprocal’ fiasco and leaves everyone with 10% rates. That’s not exactly great and those China rates are brutal but an interesting quirk in the China rates is that shipments on the water currently don’t get the 50% tariffs yesterday or (presumably) this one. That leaves room for negotiations.
Some comments from the White House spokeswoman:
- Tariff level will be brought down to universal 10% during negotiations
- Higher tariff rate for China because they imprudently retaliated
Bessent:
- Countries who did not retaliate will be rewarded
- Mexico and Canada included in 10% tariff (though not clear if this still exempts USMCA, I’d guess it does)
- We are expecting countries to come to us with their best deal
- I’m not calling it a trade war but China has escalated
- Solutions with other countries will be bespoke
- Asked on 10% tariff says “that’s going to remain”
This is a crazy line:
- This was Trump’s strategy all along, you might even say he goaded China into a bad position. He told me strategy on Sunday.
Bessent left without making it clear what the tariff rates are on the EU, Mexico and Canada. We will look for clarity on that.
This article was written by Adam Button at www.forexlive.com.