Explained: Why did Trump punish China with 125% tariffs while tolerating other countries?
Trump released the Truth Society, “Based on China’s respect for the world market, I hereby raise the tariffs alleged against China to 125%, and will take effect immediately.”
The market cheers. The S&P 500 surged 9.5%, the Nasdaq surged 12.2%, and the Dow Jones scored nearly 3,000 points in an ecstatic turn after a few days of losses. Asian exchanges follow suit. But Trump made it clear – this is not a turnaround. This is a surgical redirection. He said China will face the full force of US retaliation.
“They are very disrespectful. They have no right response. They retaliated. “China wants to reach an agreement. They just don’t know what to do… President Xi Jinping is a proud person. ”
Why only China
For months, Trump has played China as the core rival in his trade war narrative, which is currency manipulation, IP theft and currency manipulation that floods the world with cheap goods. But this week, his strategy became more directed. White House press secretary Karoline Leavitt said China “has become aggressive” unlike other people who play.
“You’re trying to say that the rest of the world will be closer to China, when we’ve actually seen the opposite effect,” she added. This is personal, strategic and psychological. The goal is to isolate China diplomatically while rallied allies behind the Washington economic leadership. Leavitt said bluntly, “The whole world is called the United States of America, not China because they need our market.”
Bond market wake-up call
So, why should Trump relax the rest of the world? The answer may lie in diplomacy, but in data. CNN reported that anxiety within the U.S. Treasury Department has risen, especially as the bond market is drastically abandoned, Trump has paused.
“The bond market is very tricky, I’m watching it,” Trump admitted. “But, yes, I saw something that people were a little uncomfortable last night…we didn’t contact lawyers…we wrote this from the heart, right?”
Finance Minister Scott Bessent sets the hub as a premeditated marginal system. “It’s always his strategy,” Becente said. “You might even say he put China in a bad position.” But Trump himself later contradicted that version of the incident.
Calculated gambling or impulse pivot?
Despite the careful narrative of strategic genius, Trump acknowledged that volatility forced people to think again. “People jump a little bit… They become Yippie… a little scared. You have to be flexible.”
This is the classic Trump: part instinct, part impulse, part theater. But for many people, clarity brings relief.
“The market is wider… looking for signs of an upcoming trade downgrade,” said Gennadiy Goldberg of TD Securities. “Without any downgrade, the market will be difficult to stabilize.”
India’s relief, China’s anger
For India, pauses cannot be better. New Delhi’s market has been on the edge since Trump imposed a 26% reciprocal tariff on Indian goods. Now, there is a temporary window, and hope has been restored.
“India and the United States are very strong partners…We hope these relations will continue to promote and deepen,” Foreign Ministry spokesman Randhir Jaiswal said. “We are negotiating on a bilateral trade agreement…I hope we can quickly conclude this particular agreement.”
But in the Himalayas, China is full of anger. Its Commerce Department issued a stern warning: “If the United States insists on further escalating its economic and trade restrictions, China has the will of enterprises and abundant means to take the necessary countermeasures and end it.”
Then came the travel warning. Analysts are now worried that Beijing can target rare earth exports, or squeeze American tech companies operating on Chinese soil.
Over time, Washington will make a “customized” deal with countries that avoid retaliation. “The only certainty we can offer is that the United States will negotiate in good faith,” Bessent said. Japan, Vietnam, South Korea and possibly India are already in active negotiations.
But what about China? That’s a separate track. Or no track at all.
Trump seems to be convinced that the greatest pressure will force Xi Jinping to admit it. But experienced Chinese observers remain skeptical. “China regards preferential treatment as a weakness,” warned Daniel Russel of the Institute of Social Policy in Asia.
Trump’s split strategy – splitting allies while reversing China, a high-temperature bill that could define the next phase of global trade. On the one hand, he re-established the U.S. leadership. On the other hand, he is escalating a potentially devastating economic deadlock with the world’s second largest economy.
Despite the smiles on Wall Street, the battle is far from over. “A lot of times, it’s not a negotiation,” Trump said.
