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Trump announces sudden reversal on tariffs

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Most country-specific tariffs paused, but duties raised on

China

imports

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US Treasury Secretary Bessent says strategy is deliberate

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Stocks rise sharply, but uncertainty remains

By Andrea Shalal, Susan Heavey and Andy Sullivan

WASHINGTON, April 9 (Reuters) - In a stunning reversal,

U.S. President Donald Trump said he would temporarily lower the

hefty duties he had just imposed on dozens of countries while

further ramping up pressure on China, sending global stocks

rocketing higher.

Trump's turnabout on Wednesday, which came less than 24

hours after steep new tariffs kicked in on most trading

partners, followed the most intense episode of financial market

volatility since the early days of the COVID-19 pandemic. The

upheaval erased trillions of dollars from stock markets and led

to an unsettling surge in U.S. government bond yields that

appeared to catch Trump's attention.

"I thought that people were jumping a little bit out of

line, they were getting yippy, you know," Trump told reporters

after the announcement, referring to a golf term.

Since returning to the White House in January, Trump has

repeatedly threatened an array of punitive measures on trading

partners, only to revoke some of them at the last minute. The

on-again, off-again approach has baffled world leaders and

spooked business executives, who say the uncertainty has made it

difficult to forecast market conditions.

The day's events cast into stark relief the uncertainty

surrounding Trump's policies and how he and his team create and

implement them.

U.S. Treasury Secretary Scott Bessent asserted that the

pullback had been the plan all along to bring countries to the

bargaining table. Trump, though, later indicated that the

near-panic in markets that had unfolded since his April 2

announcements had factored in to his thinking.

Despite insisting for days that his policies would never

change, he told reporters on Wednesday: "You have to be

flexible."

But he kept the pressure on China, the No. 2 provider of

U.S. imports. Trump said he would raise the tariff on Chinese

imports to 125% from the 104% level that took effect at

midnight, further escalating a high-stakes confrontation between

the world's two largest economies. The two countries have traded

tit-for-tat tariff hikes repeatedly over the past week.

Trump's reversal on the country-specific tariffs is not

absolute. A 10% blanket duty on almost all U.S. imports will

remain in effect, the White House said. The announcement also

does not appear to affect duties on autos, steel and aluminum

that are already in place.

The 90-day freeze also does not apply to duties paid by

Canada and Mexico, because their goods are still subject to 25%

fentanyl-related tariffs if they do not comply with the

U.S.-Mexico-Canada trade agreement's rules of origin. Those

duties remain in place for the moment, with an indefinite

exemption for USMCA-compliant goods.

"China is unlikely to change its strategy: stand firm,

absorb pressure, and let Trump overplay his hand. Beijing

believes Trump sees concessions as a weakness, so giving ground

only invites more pressure," said Daniel Russel, vice president

of international security and diplomacy at the Asia Society

Policy Institute.

"Other countries will welcome the 90-day stay of execution -

if it lasts - but the whiplash from constant zigzags creates

more of the uncertainty that businesses and governments hate,"

Russel said.

U.S. stock indexes shot higher on the news, with the

benchmark S&P 500 index closing 9.5% higher. Bond yields

came off earlier highs and the dollar rebounded against

safe-haven currencies.

The relief spread through Asian markets as they opened on

Thursday with Japan's Nikkei index surging almost 9%.

Trump's tariffs had sparked a days-long selloff that erased

trillions of dollars from global stocks and pressured U.S.

Treasury bonds and the dollar, which form the backbone of the

global financial system. Canada and Japan said they would step

in to provide stability if needed - a task usually performed by

the United States during times of economic crisis.

Analysts said the sudden spike in share prices might not

undo all of the damage. Surveys have found slowing business

investment and household spending due to worries about the

impact of the tariffs, and a Reuters/Ipsos survey found that

three out of four Americans expect prices to increase in the

months ahead.

Goldman Sachs cut its probability of a recession back to 45%

after Trump's move, down from 65%, saying the tariffs left in

place were still likely to result in a 15% increase in the

overall tariff rate.

Treasury Secretary Bessent shrugged off questions about

market turmoil and said the abrupt reversal rewarded countries

that had heeded Trump's advice to refrain from retaliation. He

suggested Trump had used the tariffs to create maximum

negotiating leverage. "This was his strategy all along," Bessent

told reporters. "And you might even say that he goaded China

into a bad position."

Bessent is the point person in the country-by-country

negotiations that could address foreign aid and military

cooperation as well as economic matters. Trump has spoken with

leaders of Japan and South Korea, and a delegation from Vietnam

met with U.S. officials on Wednesday to discuss trade matters,

the White House said.

Bessent declined to say how long negotiations with the more

than 75 countries that have reached out might take.

Trump said a resolution with China was possible as well. But

officials have said they will prioritize talks with other

countries.

"China wants to make a deal," Trump said. "They just don't

know how quite to go about it."

Trump told reporters that he had been considering a pause

for several days. On Monday, the White House denounced a report

that the administration was considering such a move, calling it

"fake news."

Earlier on Wednesday, before the announcement, Trump tried

to reassure investors, posting on his Truth Social account, "BE

COOL! Everything is going to work out well. The USA will be

bigger and better than ever before!"

Later, he added: "THIS IS A GREAT TIME TO BUY!!!"