Donald Trump has paused all tariffs for 90 days, with the exception of China that has been hit with a 125 per cent tariff.
US stocks jumped after after the President confirmed he authorised a 90 day pause on the tariffs which has caused volatility across global markets.
The President took to social media to say China "ripping off" the US is "no longer sustainable or acceptable."
In the minutes after Trump's announcement, the Dow Jones Industrial Average rose 5.76 per cent, to 39,801.82, the S&P 500 rose 6.46 per cent and the Nasdaq Composite gained 8.04 per cent.
Donald Trump made the announcement on his social media page
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Treasury Secretary Scott Bessent speaks with the media about tariffs at the White House
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The President wrote on his Truth Social page: "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 per cent, effective immediately.
"At some point, hopefully in the near future, China will realise that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable.
"Conversely, and based on the fact that more than 75 Countries have called Representatives of the United States...to negotiate a solution to the subjects being discussed relative to Trade, Trade Barriers, Tariffs, Currency Manipulation, and Non Monetary Tariffs.
"These Countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorised a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10 per cent, also effective immediately. Thank you for your attention to this matter!"
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US President Donald Trump attends a bilateral meeting with China's President Xi in 2019ReutersIt comes on a day of escalating economic tensions between Washington and Beijing.
China announced a tariff hike on US imports to 84 per cent from 34 per cent, shortly after Trump’s initial 104 per cent tariffs on Chinese imports kicked in this morning.
The US dollar strengthened against the yen and other currencies after Trump's announcement while Treasury yields pared gains after an auction of 10-year Treasury notes saw strong demand.
Stocks had also added to gains following the Treasury auction. Many investors have been worrying that Trump's wide-ranging tariffs could be severe enough to trigger a recession.
Italy's Prime Minister Giorgia Meloni and Italy's Economy Minister, Giancarlo Giorgetti
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Italy's economy minister Giancarlo Giorgetti said: "Within the G7 all of us outside the US spoke to try to calm the situation and find a way to bring the Trump administration to the table and to a reasonable position."
Giorgetti also welcomed the suspension of tariffs.
