Trump’s Tariff Play: 90-Day Freeze on Some, China Rates Soar to 125%

President Donald Trump recently adjusted his tariff policy, pausing higher tariffs for 90 days for most countries while significantly increasing tariffs on Chinese imports to 125%. This change, announced on April 9, 2025, aims to address trade imbalances but has sparked legal and economic debates.

The policy relies on the the International Emergency Economic Powers Act (IEEPA), allowing tariff imposition during a declared national emergency over trade deficits. However, legal challenges, including a lawsuit by the New Civil Liberties Alliance against China tariffs and Senate opposition to the emergency declaration, highlight disputes over presidential authority.

The 90-day pause led to a stock market surge, reflecting investor relief, but concerns remain about potential price hikes, reduced consumer spending, and retaliatory actions, especially with China, potentially escalating trade conflicts.

Trump’s tariff strategy has been a cornerstone of his economic policy, aimed at addressing perceived unfair trade practices by U.S. trading partners. Initially, on April 2, 2025, Trump declared a national emergency under the International Emergency Economic Powers Act (IEEPA) of 1977, citing large and persistent trade deficits driven by nonreciprocal trade relationships and policies like currency manipulation. This led to a baseline 10% tariff on all imports, with higher rates for countries with significant deficits, effective from April 5, 2025.

However, following market volatility and retaliatory measures, particularly from China, Trump announced on April 9, 2025, a 90-day pause on higher tariffs for countries that did not retaliate, reducing their rates to 10%.  In contrast, China, which had imposed retaliatory tariffs of 84% on U.S. imports, was excluded from this pause and faced an immediate tariff increase to 125%, as stated in Trump’s X post. Trump justified this by citing China’s “lack of respect” for global markets, escalating the ongoing trade war.

The legal foundation for these tariffs is the IEEPA, which authorizes the president to “prohibit transactions” and “regulate” imports during a national emergency posing a threat to national security, foreign policy, or the economy. Trump’s declaration on April 2, 2025, interpreted trade deficits as an “unusual and extraordinary threat,” enabling him to impose and adjust tariffs without congressional approval.

However, the use of IEEPA for tariffs has been controversial. Legal scholars argue that IEEPA lacks explicit language for imposing tariffs, potentially violating the Major Questions Doctrine, which requires clear congressional authority for significant economic actions. This debate is central to ongoing legal challenges.

The tariff policy has faced significant legal scrutiny, with the New Civil Liberties Alliance filing a lawsuit on April 3, 2025, challenging the tariffs on China, arguing Trump misapplied IEEPA for domestic economic policy rather than external emergencies. Representing a Florida-based company, the alliance claimed the law was intended for countering external threats, not economic policy, setting the stage for a closely watched legal battle.

Additionally, congressional opposition emerged, with the Senate voting 51-48 on April 5, 2025, to reject the national emergency declaration for tariffs on Canadian imports, led by Republican Sens. Susan Collins, Mitch McConnell, Lisa Murkowski, and Rand Paul, alongside Democrats . This symbolic vote, though unlikely to become law due to Republican control of the House and Trump’s veto power, underscores legislative discontent with the policy’s legal basis.

The announcement of the 90-day tariff pause on April 9, 2025, led to a significant market response, with the S&P 500 index surging over 8% intraday. This relief was attributed to reduced uncertainty for most trading partners, with Treasury Secretary Scott Bessent stating it was part of Trump’s negotiation strategy. However, the increase to 125% on China raised concerns about escalating trade wars, with China’s commerce minister opposing the move.

Economists warned of potential price hikes, reduced consumer spending, and a 60% chance of global recession by year-end, driven by trade tensions. The Tax Foundation estimated Trump’s tariffs as the largest tax hike since 1982, averaging over $1,900 per U.S. household in 2025, highlighting economic strain.

The 90-day pause provides a window for over 75 countries to negotiate new trade deals, as mentioned in Trump’s statements. This “bespoke” solution aims to create preferred trading partnerships, potentially reshaping global trade dynamics. However, the increased tariffs on China, coupled with legal challenges, suggest uncertainty, with potential for further escalation or resolution depending on negotiation outcomes and court rulings.

Comparative Analysis of Tariff Rates

To illustrate the policy’s scope, the following table compares tariff rates before and after the April 9, 2025, announcement: