Donald Trump's 90-day tariff pause fuels rally; eyes on China, India watches

US President has announced a 90-day pause on tariffs for more than 75 countries in a dramatic shift in his ongoing global trade strategy. While the temporary relief has sparked a sharp rally across global stock markets, China has been pointedly excluded from the pause — with tariffs on now hiked to 125 per cent, up from the earlier 104 per cent.

The decision, according to Trump, comes after a majority of countries entered into negotiations with Washington or chose not to retaliate against previous tariff hikes. During the 90-day window, a reduced reciprocal tariff rate of just 10 per cent will apply, offering some breathing room for global trade.

Uncertainty looms for India

India may stand to benefit from the 90-day tariff pause, particularly in sectors like textiles, pharmaceuticals, and automotive components, which have faced headwinds due to earlier trade tensions. The easing could offer Indian exporters a brief window to regain competitive footing, especially as Chinese manufacturers continue to struggle with higher levies.

However, the optimism is tempered by a lack of clarity on the specifics of the ongoing negotiations between the US and China. With no concrete details made public, markets remain on edge. The pause may be tactical rather than a signal of lasting relief, and its outcome will hinge entirely on how talks progress behind closed doors.

India’s decision to stay quiet and engage the US through bilateral channels may have shielded it from direct fallout so far. Yet, analysts warn that without transparency around the negotiations, the current sentiment could easily shift. Trade diversions may bring some gains, but until the terms of a longer-term deal are defined, uncertainty will continue to cloud the outlook — for India and the world.

China faces Trump's brunt

While the pause was welcomed by most trading nations, Trump doubled down on his hardline stance against China. The sharp increase to 125 per cent tariffs marks a significant escalation, and Beijing has responded in kind, announcing 84 per cent tariffs on US goods and denouncing the move as “tax blackmail.”

The US-China standoff shows no signs of cooling. Trump continues to accuse China of unfair trade practices and “plundering” the American economy. With no signs of fresh negotiations, the tariff war between the two economic giants appears to be entering a more entrenched phase.

Global markets react positively

Despite the flare-up with China, global equity markets surged on Thursday, buoyed by the partial reprieve. Japan’s Nikkei 225 rose 8 per cent, South Korea’s Kospi climbed over 5 per cent, and Australia’s ASX 200 gained 5 per cent. The US markets also rallied sharply — the Dow soared nearly 3,000 points, while the Nasdaq and S&P 500 posted double-digit gains.

The 90-day pause offers a window of opportunity for many economies to stabilise trade flows and renegotiate terms with Washington. However, with the China-US relationship on a razor’s edge, global markets are expected to remain volatile in the weeks ahead.

For India, the short-term relief brings hope for exporters, but experts caution that any long-term gains will depend on how deftly New Delhi navigates the evolving trade dynamics and positions itself in a world increasingly shaped by tariff diplomacy.

With agency inputs