Trump declares 90-day tariff pause except for China

President Donald Trump announced a 90 day pause on his sweeping tariffs Wednesday, giving all countries a 10 percent baseline except China, which will see even higher levies.

"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%, effective immediately," Trump wrote on Truth Social.

Saying that more than 75 countries had asked for negotiations over the tariffs, Trump said he "authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately."

The World Trade Organisation chief Okonjo-Iweala on Wednesday said that the US-China tariff war could reduce trade in goods between the two economic giants by 80 percent, pulling down the rest of the world economy.

The US-China tariff war could reduce trade in goods between the two countries by 80 percent, he added.

Okonjo-Iweala’s comments come after Trump’s comments raised tariffs in China to 125 percent on Wednesday.

“The escalating trade tensions between the United States and China pose a significant risk of a sharp contraction in bilateral trade. Our preliminary projections suggest that merchandise trade between these two economies could decrease by as much as 80 percent,” Okonjo-Iweala said in a statement.

Okonjo-Iweala added that the tariff war could “severely damage the global economic outlook.”

Okonjo-Iweala warned that the world economy risked breaking into two blocs, one centred around the United States and the other China.

“Of particular concern is the potential fragmentation of global trade along geopolitical lines. A division of the global economy into two blocs could lead to a long-term reduction in global real GDP by nearly seven percent,” she said.

She urged all WTO members “to address this challenge through cooperation and dialogue.”