Trump Reverses Course with 90-Day Tariff Pause After Bond Market Crisis; China Excluded, Tariffs Escalate to 145%

On April 9, 2025, President Trump abruptly reversed course on his Liberation Day tariffs, announcing a 90-day pause on the country-specific “reciprocal” tariff rates for all countries except China. The reversal came after the bond market — not the stock market — forced the administration’s hand, with 10-year Treasury yields spiking to 4.5% as foreign investors dumped U.S. government debt.

The Bond Market Crisis

The stock market crash that began on April 3 was dramatic but survivable. What panicked the administration was what happened in the bond market:

• 10-year Treasury yield surged from under 4% on April 4 to 4.5% intraday on April 8-9
• The speed of the move — roughly 50 basis points in three trading days — was extraordinary
• Foreign holders of U.S. Treasuries (approximately 33% of the total) were selling, a sign of eroding confidence in U.S. sovereign debt
• The simultaneous decline in stocks, bonds, and the dollar broke every historical pattern, suggesting a fundamental repricing of U.S. assets

Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick reportedly rushed to convey the severity of the bond market stress to Trump, who had publicly dismissed the stock market decline as temporary.

The Pause

At approximately 1:18 PM ET on April 9, Trump posted on Truth Social that he was authorizing a 90-day pause on the higher reciprocal tariff rates. Key terms:

• Paused: Country-specific tariff rates above 10% on approximately 75 countries
• Retained: The baseline 10% tariff on nearly all imports remained in effect
• Retained: Steel/aluminum tariffs (25%), automobile tariffs (25%), and other sector-specific duties
• Average tariff rate even after the pause: approximately 27% — the highest in over a century (per Politico estimates)

China Escalation

China was explicitly excluded from the pause. Instead, tariffs on Chinese goods were raised to 125% in the April 9 announcement, with subsequent escalation bringing the effective rate to 145% as the retaliatory spiral continued:

• U.S. tariffs on China: 145%
• Chinese tariffs on U.S. goods: 125%
• Near-total decoupling of the two largest economies in the world

Market Reaction

The pause triggered one of the largest single-day rallies in stock market history:

• S&P 500: +9.52% — the biggest one-day gain since 2008
• Trump Media (DJT): +22.7%, netting Trump over $400 million via his 53% stake
• Hours before the announcement, Trump had posted “THIS IS A GREAT TIME TO BUY!!!” on Truth Social

Significance

The 90-day pause revealed a critical constraint on the administration’s trade war: the bond market. While stock declines could be dismissed as Wall Street nervousness, surging Treasury yields threatened the government’s ability to finance its own debt and risked triggering a broader financial crisis. The episode demonstrated that even an administration willing to endure significant economic pain had limits — and that those limits were set by bond vigilantes, not voters. The suspicious timing of Trump’s social media post relative to the pause announcement prompted market manipulation investigations and insider trading scrutiny of administration allies.