U.S. President Donald Trump announced a 90-day delay on the implementation of the “Reciprocal Tariff,” declared on April 2, for all countries except China. Meanwhile, Trump increased tariffs on China from the previously declared 104% to an additional 125%, bringing the total tariff to a staggering 145%.
So why did Trump give a 90-day relief to countries like India, Japan, and South Korea, and why was China hit with such a heavy tariff?
Here are the 3 key reasons for the exemption:
1. Sharp Fall in the U.S. Stock Market:
Trump has been facing pressure from Republicans and business executives due to heavy selling in the U.S. stock market. Many investors fear a full-blown trade war could trigger a global recession. To prevent panic and stabilize markets, Trump agreed to delay the new tariffs temporarily.
2. Heavy Sell-off in the Bond Market:
Another reason behind the move is the sharp sell-off in the U.S. government bond market. Treasury Secretary Scott Bassett and White House officials expressed concern over the growing unease among investors. Trump acknowledged the sensitivity of the bond market and decided to hold off on tariffs for most countries.
3. Strategy to Isolate China Politically:
According to Axios, U.S. officials agreed that China’s retaliatory tariffs gave the U.S. an opportunity to isolate China by showing goodwill towards other nations. By pausing tariff hikes for other trade partners, the U.S. aims to strengthen alliances and politically corner China.
Also Read- Donald Trump’s $5 Million ‘Gold Card’ Visa: What It Means for Indian Nationals
What Could Be India’s Strategy?
India is expected to include essential and non-sensitive goods in the initial trade deal with the U.S. The government is considering tariff reductions on several U.S. imports, which could encourage America to ease some of its tariffs too. Meanwhile, India is also working on signing free trade agreements with the European Union and the United Kingdom. Additionally, India is preparing stricter measures against Chinese imports to prevent dumping, which may improve product quality in the domestic market.