Trump tariffs: World breathes sigh of relief after U.S. tariff reprieve; China’s duties kick in

The European Union will pause the adoption of its retaliatory trade countermeasures against a spate of U.S. goods for 90 days, European Commission President Ursula von der Leyen said following the White House reprieve on most of its own tariffs.

EU members had on Wednesday voted in favor of a package of retaliatory steps in response to U.S. tariffs on steel and aluminum.

“We want to give negotiations a chance,” von der Leyen said on social media. “If negotiations are not satisfactory, our countermeasures will kick in. Preparatory work on further countermeasures continues. As I have said before, all options remain on the table.”

The EU, a historically close transatlantic ally of the U.S., was further hit with 20% tariffs when Washington issued reciprocal duties on trade partners on April 2. The levy has been reduced to just 10% for 90 days following Trump’s Wednesday announcement.

— Ruxandra Iordache

U.S. tariffs on China imports could potentially knock off 0.5 percentage points off China’s GDP growth, Fred Neumann, chief Asia economist at HSBC, told CNBC’s “Squawk Box Europe.”

Neumann said China’s 5% GDP target is “certainly under pressure now,” assuming that U.S. tariffs on China imports remain in force. Lower GDP would require “quite a significant increase” in stimulus to offset that weaker expansion, he said, adding that China does have tools at its disposal to offset those risks.

The U.S. and China are “putting on a brave face at the moment and saying they’re not going to budge, but it is clear that for both sides, there’s plenty of disruption to come if these tariffs stay in place, and therefore one cannot rule out some negotiations behind the scenes,” Neumann said.

— April Roach

U.S. tariffs on aluminum, steel and vehicle imports could reduce the gross domestic product growth of export-reliant Germany by 0.1 percentage points in each of 2025 and 2026, German economic institutes warned on Thursday.

They added that this impact could double as a result of the additional White House duties announced on April 2, while disclaiming that “specific effects are difficult to quantify,” given the sharp hike in rates.

The institutes forecast Germany’s GDP will pick up by 0.1% and by 1.3% year-on-year in 2025 and 2026, respectively. Europe’s largest economy has come under pressure since the announcement of U.S. tariffs, particularly in its languishing auto sector.

— Ruxandra Iordache

Planned U.S. tariffs could deliver a blow of 0.3 to 0.5 percentage points to Indonesia’s gross domestic product, Indonesian Finance Minister Sri Mulyani Indrawati said, according to Reuters.

The International Monetary Fund projects that the economy of the country, which was hit with U.S. tariffs of 32%, will grow 5.1% this year.

Indonesia is considering higher U.S. imports, trimming taxes and easing import processes amid Washington’s levies, Sri Mulyani said.

— Ruxandra Iordache

New Zealand Prime Minister Christopher Luxon has been engaging on trade relations with officials in partner countries, including the European Union, Ireland, Vietnam, Malaysia, Singapore and the Philippines, according to multiple social media updates.

“Free trade works. It lifts incomes. It creates jobs. It builds partnerships. And it secures peace. I think that’s worth fighting for — and I’m up for that fight,” Luxon said in a post on the X platform.

New Zealand was struck with the White House’s baseline 10% tariff under Trump’s April 2 announcement.

— Ruxandra Iordache

Polish Finance Minister Andrzej Domanski welcomed the U.S. temporary suspension of most reciprocal tariffs.

“The first right step towards de-escalation. Less emotion, more focus on economic growth,” he said in a Google-translated social media post.

Poland has historically been a stalwart U.S. ally in Europe, especially in matters of regional security. As a member of the European Union, Poland was struck with 20% reciprocal tariffs under the White House’s April 2 announcement.

— Ruxandra Iordache

European stocks soared at the Thursday market open, with the Stoxx 600 index up by 7.25% by 8:21 a.m. London time.

All sectors were in the green at the start of the session, with banks, autos and health care logging some of the highest hikes, higher by 9.95%, 7.43% and 7.41%, respectively.

— Ruxandra Iordache

The 10-member ASEAN group pledged not to impose any retaliatory measures in response to White House tariffs and to “engage in a frank and constructive dialogue” with Washington on trade relations.

“We regard the U.S. as a longstanding and valued economic partner of ASEAN,” the group said in a statement, adding, “We remain committed to safeguarding ASEAN’s economic interests as well as maintaining strong and mutually beneficial trade relations with the U.S.”

The ASEAN group comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. 

— Ruxandra Iordache

European Commission President Ursula von der Leyen welcomed Trump’s decision to pause “reciprocal” tariffs against several nations, adding the bloc “remains committed to constructive negotiations” with the White House.

“It’s an important step towards stabilizing the global economy. Clear, predictable conditions are essential for trade and supply chains to function,” she said in a social media post.

“Tariffs are taxes that only hurt businesses and consumers. That’s why I’ve consistently advocated for a zero-for-zero tariff agreement between the European Union and the United States.”

At the same time, the EU, which on Wednesday voted to approve its first set of retaliatory steps to counter U.S. tariffs on steel and aluminum, is focusing on diversifying its trade partnerships, von der Leyen said.

— Ruxandra Iordache

In a note to clients on Wednesday evening, Deutsche Bank Research’s George Saravelos noted that U.S. President Donald Trump had mentioned the bond market during his press conference at the White House that day.

“The administration is finally signalling responsiveness to the very extreme market conditions we highlighted in the morning. At the margin, this should reduce the probability that such an extreme policy mix returns,” Saravelos said.

Stocks on Wall Street surged on Wednesday after Trump announced a 90-day pause on country-specific tariffs, with the exception of new duties on China.

Despite the market response, Saravelos warned that “the damage has been done” by Trump’s reciprocal tariffs policy.

“Even if the tariffs are permanently suspended, damage has been done to the economy via a permanent sense of unpredictability in policy,” Saravelos explained. “The events of the last few weeks will resonate amongst global economic partners during the upcoming negotiations on trade and indeed for many years to come. The desire to build greater strategic independence from the US across all fronts will be here to stay.”

— Chloe Taylor

China has been “isolated as a bad actor” as a result of mounting trade tensions and tariff impositions with the U.S., billionaire investor Bill Ackman said Thursday in a social media post.

“Every American company is immediately moving their supply chains out of China back to the U.S. or to trading partners of the U.S. who are likely to make favorable tariff deals with the U.S. Time is not China’s friend,” he noted.

“As more time goes by, more companies find other and better alternative suppliers outside of China. So China is incentivized to come to the table soon and to be reasonable in their negotiations.”

Washington has doubled down on trade levies with Beijing, which has in turn resorted to countermeasures and complaints to the World Trade Organization. While granting most other nations a tariff reprieve on Wednesday, Trump raised duties against imports from the world’s second largest economy to 125%. China had earlier in the day raised its own tariffs on U.S. goods to 84% in response to White House policies.

— Ruxandra Iordache

South Korea will press ahead with efforts to lower tariffs rates in talks with Washington, after acting President Han Duck-soo’s phone call with U.S. President Donald Trump, according to South Korean outlet Yonhap.

South Korea, which exported roughly $127.8 billion to the U.S. in 2024, had been slapped with a 25% tariff rate under the White House announcements of April 2, prior to Trump’s temporary reversal of Wednesday.

“As high-level talks have taken place, we will now prepare concrete proposals and begin negotiations on individual issues with relevant trade authorities,” an official from the South Korean Prime Minister’s Office told reporters on Wednesday. “Our foremost goal is to adjust (U.S.) tariff rates.”

— Ruxandra Iordache

Higher tariffs from China on U.S. imports have kicked in at 12.01 p.m. Beijing time, raising the tariff rate from 34% to 84%.

On Wednesday, China’s ministry of finance announced the 84% tariff rate after U.S. President Donald Trump had increased tariffs on Chinese imports to the U.S. to a net total tariff of 104%.

Trump later raised the tariff on China again, to 125% at about 1.18 a.m. Thursday, saying it would take effect “immediately”.

— Lim Hui Jie