Rand strengthens as Trump halts tariffs for 90 days

US President Donald Trump took a surprising step back in his ongoing global trade dispute on Wednesday, announcing a 90-day suspension for most countries while intensifying his confrontation with China.

Trump decided to pause higher tariffs for a 90-day period, citing negotiations with over 75 countries. “I have authorized a 90-day PAUSE” on the tariffs, Trump wrote on Truth Social, explaining that many countries reached out to negotiate and refrained from retaliating against the United States.

Despite the pause, tariffs remain in place on a flat rate of 10 percent for all countries, which took effect on Saturday.

A Shift in Tariffs Strategy

This shift marked a significant reversal from the aggressive trade policies that have previously targeted even the US’s closest allies. However, Trump continued to accuse China of taking unfair advantage in global trade, accusing them of “ripping off” the United States.

“Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125 percent, effective immediately,” Trump said. Earlier, the tariffs on Chinese goods were raised to a whopping 104 percent. In response, China retaliated by increasing tariffs on US imports to 84 percent.

Trump was firm in his stance. “At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable,” he declared.

Global Tariff Reaction and Market Response

Following the announcement, global markets saw a dramatic shift. Wall Street stocks surged after Trump’s announcement of the 90-day tariff pause. The S&P 500 jumped 6.0 percent to 5,281.44, recovering from a week of losses.

The South African rand also rebounded dramatically, strengthening to R19.26/$ after earlier hitting a record R25.35 against the British pound. Other currencies, such as the Australian dollar and the Euro, also reacted to the changes in global trade dynamics.

EU’s Countermeasures

The European Union had already launched its retaliation plan, targeting over 20 billion euros worth of US products, including soybeans, motorcycles, and beauty products, in response to tariffs on global steel and aluminum exports. However, the EU did not take action against the 20 percent US tariffs that came into effect on Wednesday.

Trump’s earlier announcement of a 10 percent baseline tariff for all countries, effective on Saturday, was part of his broader strategy to counter trade imbalances, with higher tariffs specifically targeting China and the EU. Despite tensions, Trump remained optimistic, urging Americans to “BE COOL!” and assuring them, “Everything is going to work out well.”

US-China Tensions Escalate

In the midst of the growing trade dispute, Trump shared a blunt assessment of world leaders’ actions. “I’m telling you, these countries are calling us up kissing my ass,” Trump reportedly told fellow Republicans during a dinner on Tuesday night. However, China remained defiant, with the Chinese finance ministry condemning the US’s tariff escalation, calling it a series of “mistakes.”

Meanwhile, US Treasury Secretary Scott Bessent warned of the consequences of aligning with China, cautioning that such an alliance would be like “cutting your own throat.”

Trump’s policy is designed to revive America’s manufacturing base by incentivizing companies to relocate to the United States. His most significant ire has been directed at China, accusing it of flooding markets with cheap goods, a practice he claims undermines fair competition.

China’s Response

In response to the growing trade tensions, China issued a warning for its citizens to “fully assess the risks” before traveling to the United States. Additionally, US Defense Secretary Pete Hegseth took a strong stance, warning against Chinese “threats” while visiting Panama, a key location in the broader geopolitical struggle over the Panama Canal.

As the global trade war continues, all eyes remain on how the US-China standoff evolves and its potential long-term consequences for international trade relations.