In a significant shift to U.S. trade policy announced Wednesday, the Biden administration will temporarily suspend most nation-specific import duties while substantially increasing tariffs on Chinese goods to 125%. The move comes as dozens of nations seek new trade
negotiations with Washington.
Treasury Secretary Scott Bessent revealed that a baseline 10% tariff will apply to imports from all countries except China during a 90-day pause period. The policy maintains existing sector-specific duties but marks a dramatic change in the administration’s approach to global trade relations.
The status of tariffs on Mexican and Canadian goods remains somewhat ambiguous. While Bessent indicated these nations fall under the broader announcement, previous executive orders had exempted them from reciprocal duties, instead imposing 25% tariffs only on goods not compliant with USMCA trade agreement terms.
The temporary suspension of country-specific duties follows diplomatic outreach from more than 75 nations seeking trade talks with the U.S. According to Bessent, priority negotiations will begin with Japan, Vietnam, South Korea and India.
The announcement provided relief to pharmaceutical companies, whose shares had declined Tuesday following Trump’s statement about impending drug tariffs. Markets rallied after news of the 90-day pause period.
Meanwhile, trade tensions between the U.S. and China continue to intensify. The latest increase to 125% builds upon multiple tariff hikes implemented since February, including a recent 50% increase. Prior to Wednesday’s announcement, Chinese imports faced a cumulative 104% duty rate. Beijing has responded with retaliatory measures, announcing an 84% tariff on U.S. goods effective Thursday.
World Trade Organization Director-General Ngozi Okonjo-Iweala warned of potentially severe economic consequences from the escalating U.S.-China trade conflict. The WTO projects bilateral trade between the two economic powerhouses, which represents approximately 3% of global trade, could plummet by up to 80%.
“This tit-for-tat approach between the world’s two largest economies carries wider implications that could severely damage the global economic outlook,” Okonjo-Iweala stated Wednesday. The organization estimates the decline in U.S.-China trade could trigger a nearly 7% reduction in global real GDP.
The move represents a complex balancing act for the administration, attempting to maintain pressure on China while offering other trading partners an opportunity to negotiate new terms. The temporary nature of the suspension suggests the U.S. aims to leverage this period to secure more favorable trade arrangements globally.
The policy shift comes amid broader changes in U.S. trade strategy, with pharmaceutical tariffs notably delayed despite earlier
announcements. The medical device industry has also been actively lobbying for exemptions from the tariff regime.
The new tariff structure takes effect immediately, though questions remain about implementation details and potential exemptions. The administration’s approach indicates a willingness to use aggressive trade measures against China while simultaneously pursuing diplomatic solutions with other trading partners.
The impact of these changes will likely reverberate through global supply chains and international markets, with particular significance for industries heavily dependent on Chinese imports or those seeking to diversify their supply sources. The 90-day window creates both opportunities and challenges for businesses adapting to the rapidly evolving trade landscape.
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