As the economy slides, the finance minister brief the country on the impact of tariffs. Video / Mark Mitchell
US President Donald Trump announced a 125% tariff on goods from China, effective immediately.
Tariffs against 75 other countries are paused for 90 days, with a 10% tariff.
Trump cited China’s “lack of respect” for world markets as the reason for the increase.
US President Donald Trump this morning announced he is raising tariffs on goods from China to 125%.
In a post on his favoured platform, Truth Social, he 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%, 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.”
US stocks immediately rocketed higher after Trump’s announcement.
The president’s post on Truth Social lifted the three major indexes towards one of their best days on record.
By mid-afternoon, the US market had gained about US$4.8 trillion in market value.
The tech-heavy Nasdaq was up 12.2% following the pause announcement, with tariff-exposed stocks including Nvidia (up 18.7%) and Apple (up 15.3%) making huge gains in the final hour of trading.
Elon Musk’s Tesla gained 22.7%, nearly halving its year-to-date losses.
The Dow closed up 7.9%, while the S&P 500 closed up 9.5%.
“More than 75 countries have called to negotiate a solution ... and have not, at my strong suggestion, retaliated in any way, shape or form,” Trump wrote.
Because of that, he wrote: “I have authorised a 90-day pause, and a substantially lowered reciprocal tariff during this period, of 10%, also effective immediately.”
Donald Trump has slammed China's 'lack of respect'. Photo / Getty Images
During a press conference following the announcement, Trump was asked how he could have credibility with so much changing back and forth.
Trump told reporters: “You have to have flexibility.
“You can’t say, ‘here’s a wall, I’m going to go through it’. Sometimes you have to go around the wall, under the wall ... financial markets, look how much they changed today – you have to be flexible.”
Trump said nothing was over yet and they have a “tremendous amount of spirit from other countries” – including China.
“China wants to make a deal, they just don’t know how to go about it. [They’re] quite the proud people, and President Xi is a proud man.
“I know him very well, and they don’t know quite how to go about it, but they’ll figure it out.
“They’re in the process of figuring out, but they want to make a deal.”
Asked why he posted to “be cool” just hours before announcing a tariff reversal, Trump said he “thought people were jumping a little bit out of line”, Sky News reported.
“They were getting yippy, you know, were getting a little bit yippy, a little bit afraid.”
He was watching the bond market last night and knew people were getting “a little queasy”, Sky News reported from Trump’s press conference.
Replying to the suggestion his latest decisions were in response to movement in the bond market, Trump said: “The bond market right now is beautiful.”
“The big move wasn’t what I did today, the big move was what I did on Liberation Day.
“We had Liberation Day in America. We liberated from all of the horrible deals that were made, all the horrible trade deals that were made.”
Significant global event
Finance Minister Nicola Willis told Newstalk ZB’s Mike Hosking Breakfast “uncertainty is the big theme” of the current global economic situation amid the US president’s shifting position on tariffs.
“Sometimes it’s clear the administration is making announcements, and then the US system is also in real-time working to understand the information and convey it accurately to officials on the grounds.
“This is a situation we need to keep the phones working, seeking information and monitoring developments very closely.”
She spoke to the acting Reserve Bank Governor yesterday and was continuing to be briefed regularly by Treasury.
“This is a significant global economic event and I need to keep on top of ... implications for New Zealand, responses required, are we doing the right thing.
“We should stay the course with the approach we’ve been taking with our economy. A sensible fiscal strategy, strong economic management, continuing to make reforms which support economic growth, business certainty and investment.
“We cannot control what happens elsewhere, what we can control is what happens in New Zealand. That’s why there’s even more of a premium on macroeconomic stability and sensible policy.”
NZ was “turning a corner strongly in our economic recovery, and now we are facing into a real headwind”, Willis said.
But we remain much better positioned than many countries in the world.
“I back our exporters, they are wily. We are helping them access markets. If anyone in the world can do ok, it’s New Zealand.”
Finance Minister Nicola Willis during her press briefing on world economic developments yesterday. Photo / Mark Mitchell
Magic roundabout
A New Zealand money market expert is describing the latest about-face on US tariffs as a “magic roundabout” with US trade policy moving like a yo-yo and uncertainty in the financial sector sitting at “defcon 5”.
JMI Wealth’s Andrew Kelleher told Hosking the world was living in an alternative universe after today’s tariff announcement pause.
“Crazy stuff continues. The US sharemarket has absolutely exploded to the upside. A 10% move on the Nasdac, 8% moves on the S&P 500, Dow Jones, 6-7. Who knows where that will close?” Kelleher said.
Meanwhile, the trade war with China was really “ramping up” and all the “crazily calculated tariffs” were now off the table with a baseline tariff for everyone for the next 90 days.
However, there was confusion in the European market whether it was included in the equation given it too was moving to retaliatory action.
“There are just no facts, there’s a lack of clarity and the usual colourful rhetoric from the White House media spokesperson”, Kelleher said.
He said facts would be great but they seem to be hard to come by.
Kelleher said it seemed the policy around trade and tariffs was being made “on the hoof” and all power was in Trump’s hands.
The Kiwi dollar had jumped on the back of the pause announcement, but uncertainty levels were at “defcon 5” and were driving markets higher.
“But who knows what’s going to be announced next? We’ve just got to sit and wait for this day-to-day yo-yo.
“The magic roundabout I’m calling it.”
Earlier, US Treasury Secretary Scott Bessent said Trump’s “strategy” had played out as planned after the US president paused tariffs for most countries while hitting China harder.
“This was his strategy all along, and you might even say that he goaded China into a bad position,” Bessent told reporters at the White House after Trump’s abrupt backtrack.
He said China was the “most imbalanced economy” in modern history, posing trade problems for the US and other countries.
“China is the most imbalanced economy in the history of the modern world and they are the biggest source of the US trade problems,” Bessent told reporters, saying US tariffs on Chinese imports have caused its goods to flow into Europe. He said China’s economy poses problems for the rest of the world.
JPMorgan chief Jamie Dimon had said the economy was likely headed for a recession.
- Wall Street Journal and AFP with additional reporting by NZ Herald
