Facing a global market meltdown, President Donald Trump on Wednesday abruptly backed down on his tariffs on most nations for 90 days, but raised the tax rate on Chinese imports to 125%.

It was seemingly an attempt to narrow what had been an unprecedented trade war between the U.S. and most of the world to a showdown between the U.S. and China. The S&P 500 stock index jumped more than 7% after the announcement, but the drama over Trump's tariffs will now be prolonged as the administration engages in negotiations that could cause uncertainties to persist in the world economy.

Trump posted on Truth Social that because “more than 75 Countries” had reached out to the U.S. government for trade talks and have not retaliated in meaningful way “I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately.”

Trump later told reporters that he pulled back on many global tariffs — but not on China — because people were “yippy,” and “afraid,” adding that while he expected to reach deals that “nothing’s over yet.”

The president said he had been watching the bond market and that people were “getting a little queasy.” But after his tariff pause, Trump described the bond market as “beautiful.”

It seemed impossible to fully deny the pressure created by volatile financial markets that had been pushing Trump to reconsider his tariffs, even as some administration officials said the reversal had always been the plan. The pause was announced after the global economy appeared to be in open rebellion against Trump’s tariffs as they took effect Wednesday, a signal that the U.S. president was not immune from market pressures.

The 10% tariff was the baseline rate for most nations that went into effect on Saturday. It's meaningfully lower than the 20% tariff that Trump had set for goods from the European Union, 24% on imports from Japan and 25% on products from South Korea. Still, 10% would represent an increase in the tariffs previously charged by the U.S. government.

Treasury Secretary Scott Bessent said that the negotiations with individual countries would be “bespoke,” meaning that the next 90 days would involve talks on a flurry of potential deals. Bessent, a former hedge fund manager, told reporters that the pause was because of other countries seeking talks rather than brutal selloffs in the financial markets.

“The only certainty we can provide is that the U.S. is going to negotiate in good faith, and we assume that our allies will too,” Bessent said.

The treasury secretary said he and Trump “had a long talk on Sunday, and this was his strategy all along” and that the president had “goaded China into a bad position.” Bessent said that Canada and Mexico would now be tariffed at 10%, even though those two countries had been tariffed by as much as 25% by Trump ostensibly to address fentanyl smuggling and illegal immigration.

Prior to the reversal, business executives were warning of a potential recession caused by his policies, some of the top U.S. trading partners are retaliating with their own import taxes and the stock market is quivering after days of decline.

White House press secretary Karoline Leavitt said the walk back was part of Trump’s negotiating strategy.

Leavitt said that the news media "clearly failed to see what President Trump is doing here. You tried to say that the rest of the world would be moved closer to China, when in fact, we’ve seen the opposite effect the entire world is calling the United States of America, not China, because they need our markets.”

But market pressures had been building for weeks ahead of Trump's move, with the president at times suggesting the import taxes would stay in place while also saying that they could be subject to negotiations.

Particularly worrisome was that U.S. government debt had lost some of its luster with investors, who usually treat Treasury notes as a safe haven when there's economic turbulence. Government bond prices had been falling, pushing up the interest rate on the 10-year U.S. Treasury note to 4.45%. That rate eased after Trump's reversal.

Gennadiy Goldberg, head of U.S. rates strategy at TD Securities, said before the announcement that markets wanted to see a truce in the trade disputes.

“Markets more broadly, not just the Treasury market, are looking for signs that a trade de-escalation is coming," he said. "Absent any de-escalation, it’s going to be difficult for markets to stabilize.”

John Canavan, lead analyst at the consultancy Oxford Economics, noted that while Trump said he changed course due to possible negotiations, he had previously indicated that the tariffs would stay in place.

“There have been very mixed messages on whether there would be negotiations," Canavan said. "Given what's been going on with the markets, he realized the safest thing to do is negotiate and put things on pause.”

The whipsaw-like nature of Wednesday could be seen in the social media posts of Bill Ackman, a hedge fund billionaire and Trump supporter.

“Our stock market is down,” Ackman posted on X. “Bond yields are up and the dollar is declining. These are not the markers of successful policy.”

Ackman repeated his call for a 90-day pause in the post. When Trump embraced that idea several hours later, an ebullient Ackman posted that Trump had “brilliantly executed” his plan and it was “Textbook, Art of the Deal,” a reference to Trump's bestselling 1987 book.

Presidents often receive undue credit or blame for the state of the U.S. economy as their time in the White House is subject to financial and geopolitical forces beyond their direct control.

But by unilaterally imposing tariffs, Trump is exerting extraordinary influence over the flow of commerce, creating political risks and pulling the market in different directions based on his remarks and social media posts. There still appear to be 25% tariffs on autos, steel and aluminum, with more imports set to be tariffed in the weeks ahead.

On CNBC, Delta Air Lines CEO Ed Bastian said the administration was being less strategic than it was during Trump's first term. His company had in January projected it would have its best financial year in history, only to scrap its expectations for 2025 due to the economic uncertainty.

“Trying to do it all at the same time has created chaos in terms of being able to make plans,” he said, noting that demand for air travel has weakened.

Before Trump's reversal, economic forecasters say his second term has had a series of negative and cascading impacts that could put the country into a downturn.

“Simultaneous shocks to consumer sentiment, corporate confidence, trade, financial markets as well as to prices, new orders and the labor market will tip the economy into recession in the current quarter,” said Joe Brusuelas, chief economist at the consultancy RSM.

Bessent has previously said it could take months to strike deals with countries on tariff rates. But in a Wednesday morning appearance on “Mornings with Maria,” Bessent said the economy would “be back to firing on all cylinders” at a point in the “not too distant future.”

He said there has been an "overwhelming" response by “the countries who want to come and sit at the table rather than escalate.” Bessent mentioned Japan, South Korea, and India. "I will note that they are all around China. We have Vietnam coming today,” he said.

What's not yet known is what Trump does with the rest of his tariff agenda. In a Tuesday night speech, he said taxes on imported drugs would happen soon.