MW Trump drops tariff rate to 10% for most countries. Keep in mind that he 'won't stop trying to use tariffs.'

By Victor Reklaitis

A 10% universal tariff plus a 125% rate for China is 'still a massive escalation,' an analyst says

U.S. President Donald Trump's partial retreat on his "liberation day" tariffs has generated a big reaction from markets and analysts, with one veteran analyst warning that relieved investors shouldn't get too comfortable.

"The Street will think it's beaten back the Navarro purist position, so now it's on a glide path to stopping tariffs entirely and its influence is demonstrated again as huge. Not so fast," said Terry Haines, founder of forecasting firm Pangaea Policy, referring to White House adviser Peter Navarro's embrace of tariffs.

Haines stressed that Trump "won't stop trying to use tariffs to solve major geopolitical and economic issues."

'This is no way to run a railroad. But it is better than not relenting.'Gerard MacDonell, 22V Research

In his latest move with tariffs, Trump on Wednesday afternoon said China will face a new tariff rate of 125%, up from 104%, but other countries are getting a rate of 10% for 90 days. His move came around 15 hours after his "liberation day" rates had gone into effect, hitting the European Union with a 20% tax on goods imported to the U.S., while Japan had been at 24% and South Korea at 25%.

U.S. Treasury Secretary Scott Bessent said "every country in the world who wants to come and negotiate" would get a 10% baseline tariff, while China will be raised to 125% "due to their insistence on escalation." Bessent added that Canada and Mexico are included in the countries getting a 10% tax on imports for 90 days.

Bessent also said sector-based tariffs would continue. Such tariffs include a 25% levy on steel and aluminum imports that took effect last month, as well as a 25% duty for cars and some automobile parts that went into effect last week. Trump looks poised to impose other sectoral tariffs as well, such as for pharmaceuticals and copper.

Analysts are noting that U.S. tariff rates remain elevated even after Wednesday's development. Erica York, an economist and vice president of federal tax policy at the Tax Foundation, said in a social-media post that "a 10% universal tariff plus higher on China is still a massive escalation."

Gerard MacDonell, an economist at 22V Research, criticized how Trump had quickly changed his stance even as he welcomed the Trump climbdown.

"This is no way to run a railroad. But it is better than not relenting," MacDonell said in a note. He also said, while there is a view that the "remaining uncertainty will fate the U.S. to recession," that is "probably not the best bet." He added that it's a win to be "eliminating the drain on real income imposed by a huge import tax hike."

Harvard economist Ken Rogoff said in a CNN interview that the 10% baseline levy is "not a good idea, but it's not the end of the world."

Trump, appearing at a White House event with auto-racing champions, said "nothing is over yet," but suggested his team was working to cut trade deals with a variety of nations.

"We have a tremendous amount of spirit from other countries, including China. China wants to make deal. They just don't know how quite to go about it," Trump said.

Trump also called the bond market "beautiful" after a Treasury (TY00) selloff, bringing a spike in government bond yields, caused some alarm overnight.

"The bond market right now is beautiful. I saw last night people where people were getting a little queasy," he said. But Trump didn't directly credit last night's market movements for influencing his decision to pause tariffs.

Similarly, Bessent told reporters that the shift on tariffs wasn't due to the markets but "because of a large number of inbounds - we've had more than 75 countries contact us."

The main U.S. stock gauges DJIA COMP soared Wednesday following Trump's partial retreat. The S&P 500 SPX closed up 9.5%.

Greg Robb and Robert Schroeder contributed.

-Victor Reklaitis

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April 09, 2025 16:45 ET (20:45 GMT)

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