Trump Stuns With Tariff Backtrack But Hikes China Rate To 125%

China's planned retaliatory tariffs on U.S. goods came into effect Thursday, adding an extra 84% duty on American imports.

The implementation follows a sharp escalation in the trade dispute, with U.S. President Donald Trump announcing Wednesday a new plan to raise tariffs on Chinese products to 125%.

At the same time, Washington has paused tariffs on select other countries.

Trump abruptly paused tariffs on most countries, sparking euphoria on global markets Thursday, but upped the ante on a brutal trade war with superpower rival China.

After days of market turmoil, stocks on Wall Street and across Asia saw huge surges in reaction to Trump's announcement that he was halting a levy hike for almost all nations for 90 days.

But Trump also said he was raising tariffs on China to 125 percent because of a "lack of respect."

Trump denied that he had backtracked on the tariffs, telling reporters that "you have to be flexible."

"People were jumping a little bit out of line, they were getting yippy, a little bit afraid," Trump said. "Yippy" is a term in sports to describe a loss of nerves.

He said he had been watching the "very tricky" state of the crucial US bonds market before his decision.

"I saw last night where people were getting a little queasy," he said, as US bond yields rose during the stocks sell-off -- a major economic red light as American sovereign government debt is normally seen as a safe haven for investors in troubled times.

Trump also predicted that trade deals will be made with all countries, including China, which has for now, refused to roll back on retaliatory tariffs on US goods.

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

Trump also said that he "can't imagine" increasing Chinese tariffs more than he has.

Markets have been on a rollercoaster ride since Trump's announcement of sweeping global tariffs one week ago on what he called "Liberation Day" before his dramatic pause on Wednesday.

Trump had imposed a 10 percent baseline tariffs on all countries which came into effect on Saturday, and higher rates on key trading partners like China and the European Union that he accused of cheating the United States, which activated on Wednesday.

But as markets swayed yet again, Trump said in a surprise announcement on his Truth Social network that "I have authorized a 90 day PAUSE" on the higher tariffs, while the baseline 10 percent would remain.

He said that he took the decision after more than 75 countries reached out to negotiate and did not retaliate.

At the same time, Trump ramped up his confrontation with China, which has announced retaliatory tariffs of 84 percent on US imports from midday

The new levies on US imports are effective from 12:01 pm (0401 GMT) on Thursday.

Beijing said Washington's steps pile "mistakes on top of mistakes".

The European Union had earlier launched its own counterattack, announcing measures targeting some US products from next week in retaliation for American duties on global steel and aluminum exports.

The 27-nation bloc will hit more than 20 billion euros' worth of US products, including soybeans, motorcycles and beauty products.

But the EU notably did not retaliate against the separate "Liberation Day" tariffs of 20 percent that came into effect on Wednesday.

Wall Street stocks rocketed on Trump's pause announcement.

The S&P 500 surged 9.5 percent to 5,456.90, snapping a brutal run of losses over the past week.

Markets in Asia on Thursday also rallied, with Hong Kong, Taipei, Australia and Tokyo surging on opening after days of losses.

Stocks in Chinese economic powerhouse Shanghai were also up, despite Trump's decision to further hike tariffs.

Before his pivot, Trump said world leaders were rushing to negotiate "tailored" deals with the United States, with Japan and South Korea among those sending delegations to Washington.

"I'm telling you, these countries are calling us up kissing my ass," Trump told a dinner with fellow Republicans on Tuesday night.

Trump believes his policy will revive America's lost manufacturing base by forcing companies to relocate to the United States.

The billionaire former property tycoon has particularly raged against China, accusing it of excess production and "dumping" inexpensive goods on other economies.

With the trade war between the world's two biggest economies showing little signs of abating, China told tourists on Wednesday to "fully assess the risks" before travelling to the United States.

Separately, US Defense Secretary Pete Hegseth warned against Chinese "threats" as he visited Panama, whose canal is at the center of a row between Beijing and Washington.