White House spokesperson: Tariff level will be brought down to universal 10% during negotiations

White House spokesperson: Tariff level will be brought down to universal 10% during negotiations

President Donald Trump has taken a significant step in his trade policy, raising the U.S. tariff rate on China to 125% and implementing a 90-day pause on steep 'reciprocal' tariffs on non-retaliating countries. This move, announced on Wednesday, comes amid ongoing trade tensions and is part of a broader strategy to bring down the universal tariff level to 10% during negotiations.

The White House's announcement, made via a social media post on Truth Social, stated that the tariff on China has been increased to 125% effective immediately. Concurrently, a 90-day pause on steep reciprocal tariffs has been authorized, with a substantially lowered rate of 10% during this period for countries that have not retaliated against the U.S.

The U.S. stock market responded positively to the news, with the S&P 500 index soaring. However, the long-term implications of these tariffs remain uncertain. Economists predict that all Trump's tariffs will cost the average household $3,800 in higher prices this year, potentially leading to inflation above 4% and a slowdown in economic growth.

China, in response, has raised its tariff on U.S. goods to 84%, while the EU has adopted a 25% tariff on a range of U.S. goods worth approximately $23 billion. This escalation has led to a tit-for-tat trade war between the world's two largest economies.

The White House's hope is that other countries will suffer enough pain to open their economies to more American exports, leading to negotiations that would reduce the tariffs. However, the success of this strategy depends on how Americans react to the tariffs. If prices rise noticeably and jobs are lost, voters could turn against the duties, making it harder to keep them in place.

The tariffs will hit many Asian countries particularly hard, with duties on Vietnamese imports rising to 46% and on goods from Indonesia to 32%. Tariffs on some Chinese imports will now be as high as 79%. These increases are expected to push clothing prices 17% higher this year, according to the Yale Budget Lab.

The White House's strategy of a pause and negotiations aims to bring the universal tariff level down to 10%. However, the effectiveness of this approach remains to be seen, and the economic impact of these tariffs will continue to be closely watched by investors and financial professionals.