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In a surprise move that sent global markets soaring, US President Donald Trump announced a 90-day pause on most of the new tariffs his administration had planned — but left China out of the deal. Instead, tariffs on Chinese goods have been hiked sharply, fueling more tension in the ongoing trade war between the two largest economies.
Asian markets shot up early Thursday after Trump’s announcement of the tariff pause. Japan’s Nikkei 225 jumped an impressive 8.8%, while South Korea’s Kospi index surged over 5%. Australia’s ASX 200 also gained around 5%, showing just how relieved investors were by the pause.
Stephen Innes, managing partner at SPI Asset Management, described the mood shift as a dramatic one. “It’s now a manageable risk, especially as global recession tail bets get unwound, and most of Asia’s exporters breathe a massive sigh of relief,” he told Reuters.
China left out — and hit harder
But while most countries were spared for now, China faced the opposite treatment. President Trump raised tariffs on Chinese imports to 125%, up from the already punishing 104% rate. The move didn’t go unanswered — Beijing responded by announcing its own “countermeasures,” slapping an 84% tariff on US goods. Chinese officials also made it clear they had no plans to give in to US pressure.
“We will not bow down to the tax blackmail,” China’s official statement read, adding fuel to an already heated trade dispute that has now turned personal.
Trump, for his part, has long claimed that foreign countries, especially China, have taken advantage of the US economy. He has accused other nations of imposing steep duties on American goods and “plundering” US jobs and industries.
His tariff strategy is meant to level the playing field, according to the White House. But critics argue it’s adding pressure to the global economy and triggering unnecessary financial stress.
Wall Street follows Asia’s lead
On Wednesday, US stocks saw a major rally. The Dow Jones Industrial Average jumped nearly 3,000 points, a gain of 7.87%, while the Nasdaq rocketed up more than 12% and the S&P 500 rose 9.5%.
These sharp gains followed weeks of extreme volatility as investors tried to figure out how the tariff war would affect the broader economy.
Inflation eases — but tariffs could reverse that
Meanwhile, inflation in the US appears to be slowing down. March numbers are expected to show consumer prices rising by 2.6%, down from 2.8% in February, with core inflation (excluding food and energy) dipping slightly to 3%.
Still, the Federal Reserve remains concerned. Fed Chair Jerome Powell said the situation is far from stable. “There’s a lot of waiting and seeing going on, including by us,” he said, indicating that interest rates would likely stay around 4.3%. “That just seems like the right thing to do in this period of uncertainty.”
AI industry could suffer from tariff fallout
The International Energy Agency (IEA) warned that a full-blown trade war could slow down the fast-growing data center and AI sectors. “Slower economic growth, more tariffs in more countries” are all part of the headwind scenario that could stunt development, said IEA’s Director of Technology, Laura Cozzi.
By 2030, data centers are expected to consume around 945 terawatt hours of electricity globally. But in the “headwind” case, that number drops to 670 TWh. In the US, data centers are projected to make up nearly half of electricity demand growth by 2030 — meaning that any disruption could delay or derail major projects.
China’s yuan drops to weakest level since 2007
Adding to the economic drama, China’s currency — the yuan — slid to its lowest level against the US dollar since the 2007 financial crisis. The yuan dropped to 7.3518 per dollar in early trading Thursday. The People’s Bank of China has allowed it to weaken gradually, but traders say the move is clearly linked to growing trade tensions with the US.
“A modest, gradual depreciation of the yuan is still the preference,” economists at Societe Generale said. But they warned that China is walking a fine line between staying competitive and keeping financial markets calm.
Oil prices dip despite global rally
Despite the global market bounce, oil prices slipped Thursday as the US-China trade war weighed heavily on demand expectations. Brent crude dropped by 77 cents to $64.71 a barrel, while US West Texas Intermediate fell by 65 cents to $61.70.
Analysts say the uncertainty is keeping oil traders on edge. “This uncertainty is still likely to drag on global growth, which is clearly a concern for oil demand,” ING strategists noted.
Pipeline issues, rising inventories add pressure
In the US, crude oil inventories rose more than expected — by 2.6 million barrels — further putting pressure on prices. Meanwhile, the Keystone oil pipeline remained shut due to a spill in North Dakota, and the Caspian Pipeline Consortium resumed limited operations after a temporary court block was lifted.
Trump’s decision to pause tariffs for most countries brought temporary relief to financial markets and global economies — but the exclusion of China signals that the US-China trade conflict is far from over.
