Trump pauses reciprocal tariffs on many nations for 90 days, increases tariff on China

President Trump said Wednesday that he paused his reciprocal tariffs for 90 days, a major reversal of his “Liberation Day” plan that ignited a multifront trade war.

Mr. Trump said tariffs on nations that don’t retaliate against the U.S. would drop to 10%, which aligns with his blanket tariff level on all imports. The White House said Canada and Mexico would also face a 10% rate.

At the same time, Mr. Trump said he was increasing the tariff rate on China to 125%, effective immediately, citing Beijing’s move to retaliate by increasing its levy on U.S. goods to 84%.

U.S. stocks mounted a huge rally on the news, one of the markets’ best days in history. The Dow Jones Industrial Average surged 3,000 points, ending up 7.9%, the Nasdaq soared 12.2%, and the S&P 500 rose 9.5%, its third-best day since 1940.

In granting the pause, Mr. Trump said people were getting skittish and that dozens of nations approached his administration to negotiate reductions in trade barriers against the U.S.

“They were getting a little bit yippy, a little bit afraid, unlike these champions, because we have a big job to do,” Mr. Trump said while greeting NASCAR and Indy racing champions at the White House. “No other president would have done what I did.”

Mr. Trump said the U.S. received a “tremendous amount of spirit from other countries,” including China. He said Beijing wanted to make a deal but didn’t know “how quite to go about it.”

The pause has been a major U-turn in White House messaging in recent days. Officials had ruled out pauses or relief, saying the program was necessary to correct trade deficits and put Main Street ahead of Wall Street.

The reciprocal tariffs went into effect at midnight Tuesday, meaning they lasted about 14 hours before Mr. Trump’s pause.

“Trump blinked,” Rep. Steven Horsford, Nevada Democrat, told U.S. Trade Representative Jamieson Greer, who had spent hours testifying to the House Ways and Means Committee about the tariffs before Mr. Trump’s announcement.

“This is amateur hour, and it needs to stop,” Mr. Horsford said. “WTF, who’s in charge? Because it sure doesn’t look like it’s the trade representative. You just got the rug pulled out from you.”

Tariffs are taxes or duties that importers pay on goods from foreign markets. Mr. Trump said tariffs could force companies to return to America or keep their operations in the U.S., employ American workers and create revenue to fund domestic programs.

In many cases, U.S. companies will pay the levies and may pass along at least some of the cost to consumers through higher prices.

Lawmakers, businesses and investors have spent days trying to digest Mr. Trump’s decision to issue a 10% tariff on all imports and heftier “reciprocal” levies on countries with far more exports to the U.S. than imports from American producers.

An Economist/YouGov poll released Wednesday found that 56% of Americans say Mr. Trump’s tariff efforts have “gone too far,” while 27% said they have “been about right.”

As Mr. Trump pulled back, Democrats accused him of inflicting unnecessary whiplash.

“He’s playing red light-green light with our economy,” said Senate Minority Leader Charles E. Schumer, New York Democrat.

Some conservatives who generally support Mr. Trump worried that the economic gains from the reciprocal levies wouldn’t be worth the pain.

On Tuesday, Senate Republicans said they were alarmed that Mr. Trump was not considering exclusions for certain industries, and they warned Mr. Greer that some American businesses could go bankrupt from the levies.

Sen. Rand Paul, Kentucky Republican, warned that tariffs are taxes on Americans, and Sen. Ted Cruz, Texas Republican, said on his podcast that Republicans could face a “bloodbath” in 2026 if the tariff plan leads to a recession.

“You would face a Democrat House, and you might even face a Democrat Senate,” Mr. Cruz said.

Sen. Chuck Grassley, Iowa Republican, co-sponsored a bipartisan bill that would let Congress rein in the president’s ability to impose tariffs. Rep. Don Bacon, Nebraska Republican, is leading similar legislation in the House.

Mr. Greer defended Mr. Trump’s work during his second consecutive day of testimony on Capitol Hill.

He said trade deficits are a national emergency and Mr. Trump took bold action to restore U.S. manufacturing while reducing the impediments foreign nations use to block U.S.-made goods.

“There are a lot of countries that understand exactly what the problem is that the president has set out and are willing to talk to us and are willing to negotiate,” Mr. Greer said.

House Ways and Means Committee Chairman Jason Smith, Missouri Republican, praised the administration for trying to correct a system in which American jobs are too often sent to places such as Mexico.

“Changing course and undoing the damage caused by years of unbalanced trade relationships won’t happen overnight,” said Mr. Smith. “President Trump’s economic agenda, from tariffs to tax relief to deregulation, is about making it competitive again to build, manufacture, grow and produce in America.”

Mr. Trump’s pivot to a 10% tariff across the board will be a near-term boon to companies that set up supply chains in places such as Vietnam and Cambodia, which were facing 46% and 49% tariffs, respectively, and to small nations like Lesotho, which felt blindsided by Mr. Trump’s hefty 50% reciprocal levy.

The European Commission approved tariffs that retaliate against Mr. Trump’s steel and aluminum tariffs, issued earlier this year. The levies are scheduled to take effect Tuesday and target $24 billion worth of U.S. products, including motorcycles, poultry, and steel and aluminum, though Mr. Trump’s pause on reciprocal tariffs could delay additional pushback from Europe.

When asked whether his credibility might falter because of the flip-flop, Mr. Trump said it was not about credibility but “flexibility.”

“Sometimes you have to be able to go under the wall, around the wall or over the wall,” he said.

Quizzed on possible exemptions for certain U.S. companies, Mr. Trump said he would “look at it as time goes on” and make decisions “instinctively.”

China is a notable outlier at this juncture. On Wednesday, Beijing increased levies on U.S. goods from 34% to 84% in response to Mr. Trump’s decision to slap a 104% tariff on Chinese goods.

Mr. Trump responded by raising the levy on Chinese goods to 125%. The move could have sweeping implications for toy companies and others that rely on Chinese output and could raise prices to keep their operations afloat.

“When you punch at the United States of America, President Trump is going to punch back harder,” White House press secretary Karoline Leavitt said.

The National Foreign Trade Council, a business association that promotes access to the global marketplace, said the broader pause was a “step in the right direction.”

“But let’s not celebrate the fact that it appears to leave in place a new baseline of 10% tariffs on most countries, plus significant levies on China, steel and aluminum and autos with the promise of more duties to come,” NFTC President Jake Colvin said. “While this temporary pause may lessen the immediate pain, it doesn’t diminish the uncertainty that is paralyzing companies’ trade, sourcing, and investment calculations as well as Americans’ ability to budget for their families and their future.”