Trump’s 90-Day Tariff Reprieve Shakes Global Markets: EU Pushes Back, China Escalates

Treasury Yields Tumble After Trump Softens Global Tariff Stance 

U.S. financial markets responded with cautious optimism Thursday after President Donald Trump announced a 90-day universal tariff reprieve—a dramatic move to calm investor anxiety after days of bond market volatility. 

The 10-year Treasury yield fell sharply by over 10 basis points to 4.288%, and the 2-year Treasury yield dropped similarly to 3.841%, signaling renewed investor confidence—at least temporarily. On Wednesday, yields had spiked as high as 4.51%, marking the most significant intraday movement in months. 

What Did Trump Announce? A 10% “Universal Tariff” for Most — But Not China 

President Trump declared a 90-day “pause” on tariffs for all countries except China, implementing a temporary universal tariff rate of 10%. The reprieve aims to cool tensions after weeks of global backlash and domestic market shakiness. 

 “The bond market was very tricky,” Trump said. “But right now, it’s beautiful… I saw last night where people were getting a little queasy.” 

While most nations received some relief, China was hit with an aggressive 125% tariff on its exports to the U.S.—an escalation in the ongoing trade war between the world’s two largest economies. 

China’s Retaliation: Stronger Than Ever 

In response, China announced new tariffs on $80 billion worth of American agricultural goods, rare earth minerals, and electric vehicles. The Chinese Ministry of Commerce stated the U.S. actions were “provocative” and accused Washington of undermining WTO norms. 

Beijing has also begun rallying support within the BRICS+ bloc, calling for a coordinated economic response. Some analysts believe China’s retaliation could spill over into semiconductors, tech hardware, and raw material exports, further shaking global supply chains. 

EU Calls for WTO Action: “No Clarity, No Fairness” 

The European Union expressed sharp criticism of Trump’s tariff strategy, calling it “chaotic and destabilizing.” EU Trade Commissioner Monique Renaud said: 

 “We demand clarity and consistency. A sudden universal tariff without multilateral consultation undermines trade certainty and breaches WTO principles.” 

Brussels is reportedly considering filing a formal complaint at the World Trade Organization and exploring targeted tariffs on American tech and pharmaceuticals. 

Germany, France, and Italy have already urged the European Central Bank to assess the long-term impact of Trump’s tariff war on European markets. 

Bond Markets React with Relief—For Now 

After a volatile Wednesday that saw a major sell-off in bonds, Thursday’s announcement helped stabilize the market. Strong demand during a 10-year debt auction provided further support for Treasury prices. 

Yet experts remain cautious. Analysts at Deutsche Bank noted:

 “While markets welcomed the Trump ‘put,’ the genie is out of the bottle when it comes to U.S. policy unpredictability. A 10% universal tariff is the most aggressive trade maneuver in modern history.” 

What Comes Next: Economic Data and Market Watch 

All eyes are now on the March Consumer Price Index (CPI), due later Thursday, which could offer deeper insight into inflation trends. Producer Price Index (PPI) data and weekly jobless claims are also on deck this week. 

These indicators will be key in gauging whether the Federal Reserve maintains its current stance or adjusts its interest rate policy amidst tariff-induced volatility. 

Conclusion: Relief or More Chaos Ahead? 

While Trump's 90-day tariff reprieve may provide short-term relief, uncertainty lingers. With China retaliating, the EU warning of legal action, and inflation concerns still on the table, global markets remain on edge. 

Investors, trade partners, and consumers alike should brace for more twists in Trump’s evolving trade war playbook.