Trump tariffs on hold — except China: What happens next?

US President Donald Trump on Wednesday abruptly paused import tariffs for 90 days on dozens of countries — except China — a week after announcing unprecedented penalties on most of the world over what he says are unfair trade practices.

Trump, however, doubled down on China, raising tariffs on the world's second-largest economy to 125%, citing a "lack of respect" by Beijing.

On Thursday, the White House clarified that Chinese producers would pay a total of 145% in tariffs on imports to the US due to a 20% duty that was levied earlier in the year.

"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," the president wrote on his Truth Social platform.

Trump later told reporters that he "can't imagine" increasing Chinese tariffs any further, however.

The tariff pause was announced just 13 hours after the duties had taken effect, but Trump denied he had backtracked, telling reporters that "you have to be flexible."

Following the pause, the S&P 500 surged 9.5% on Wednesday, while the tech-heavy NASDAQ closed up 12.2% — both indices marking one of their best days in history. European and Asian stock markets also rallied upon opening on Thursday.

However, as investors digested the full impact of the tariff on Chinese exports, many US stocks gave up much of their gains.

The European Union, which faces a 20% tariff on exports to the US, welcomed the delay and said it had paused its own retaliatory tariffs on US imports for 90 days.

"We want to give negotiations a chance," European Commission President Ursula von der Leyen said in a statement on platform X on Thursday.

Why did Trump pause most tariffs, except for China?

Trump was under intense pressure from many sides to put the levies on hold after several days of market turmoil as fears mounted of the far-reaching effects the tariffs would have on economic growth.

They also sparked an adverse reaction in the bond market, where the US government and corporations borrow money. Investors dumped bonds or demanded higher interest as confidence in the US fell. Yields on 10-year Treasury notes at one point reached 4.5%.

Last week's shock announcement was widely criticized by lawmakers, policymakers and business leaders in the US and overseas as being overly harsh while creating uncertainty for global supply chains, companies and consumers.

Those adverse reactions are believed to have played a pivotal role in prompting the administration to reconsider its stance, given the potential for a financial crisis. 

The Trump administration, however, framed the delay as a strategic move to bring other nations to the negotiating table.

The White House has said that some 75 countries have been in touch since the new tariffs were first announced last Wednesday to discuss new trade deals.

Some analysts said that by excluding China from the tariff pause and even hiking tariffs on Chinese imports, Trump had sought to isolate Beijing, his primary trade adversary.

Which tariffs are included in the 90-day pause?

Trump delayed what he calls "reciprocal" tariffs on 60 trading partners of the US and the EU — which last week ranged from 46% for Cambodia, 36% for Indonesia and 20% for EU members.

Critics, however, argue that the tariffs weren't calculated based on levies imposed by other countries. 

The tariffs were tailored to each country, based on the Trump administration's calculation of their trade surplus with the US.

Despite the pause, a baseline tariff of 10% remains in place for all countries' imports.

The delay does not affect tariffs previously imposed by Trump, including those on steel, aluminum, cars and vehicle parts.

Energy products and certain minerals not available domestically were also excluded from the pause.

How has China reacted?

China initially remained defiant, with Foreign Ministry spokesperson Mao Ning posting, "We don't back down," on the social media platform X.

Mao shared a video of a defiant speech by late Chinese leader Mao Zedong from 1953 during its war with the United States on the Korean peninsula.

China's Ministry of Commerce was, however, more restrained, calling on Trump to meet Beijing "halfway."

Ministry spokeswoman He Yongqian said China wanted to negotiate "based on the principles of mutual respect, peaceful coexistence and win-win cooperation, properly resolve differences through dialogue and consultation."

By Friday, Beijing said it was raising its additional tariffs on US imports to 125%.

Chinese state media reported that the country had filed a lawsuit with the World Trade Organization (WTO) following Trump's latest tariff hikes.

What could happen next?

The 90-day pause is due to expire in early July, giving the US and its trading partners little time to negotiate trade policies that better suit Washington.

Trump twice delayed tariffs on Canada and Mexico and, in theory, could offer a further extension to the rest of the world.

As regards the huge tariff now facing Chinese exporters, Trump said a resolution with Beijing is also possible.

"A deal's going to be made with China. A deal's going to be made with every one of them [other countries]," he said, adding, however, that China's leaders "don't quite know how to go about it."

But US officials have said they will prioritize talks with the likes of Vietnam, Japan, South Korea and other countries who are lining up to strike a bargain.

"This will go down in American history as the greatest trade negotiating day we have ever had," Trump's senior trade advisor, Peter Navarro, said late Wednesday.

"We're in a beautiful position for the next 90 days" to seek trade deals with partners, Navarro told ABC News.