Financial markets across Asia rallied Thursday after US President Donald Trump announced a temporary easing of tariffs on most countries, offering a 90-day pause in enforcement. However, the move did little to cool tensions with China, as the United States imposed a steep 125% tariff on Chinese goods, prompting swift retaliation from Beijing.

The reversal comes after days of financial turmoil triggered by escalating trade tensions. Trump’s 10% universal levy on imports—excluding China—will remain in place, but nations hit by it have been granted a three-month reprieve to renegotiate terms.

In contrast, the trade standoff between the world’s two largest economies took a sharp turn. Citing a “lack of respect” from China, Trump defended the unprecedented 125% tariff hike on Chinese imports. Beijing responded immediately, implementing an 84% retaliatory tariff on all US goods and reaffirming its refusal to “back down to Trump.”

Despite the ongoing tensions, Wall Street surged on Wednesday, with major indices posting historic single-day gains. That optimism spilled over into Asia, where markets in Japan, Taiwan, and South Korea clawed back much of their recent losses, buoyed by investor confidence that a wider trade meltdown may yet be avoided.

President Trump, speaking at a Nascar-themed event at the White House, signaled hope for future deals. “What a day, but more great days coming,” he said early Thursday. He vowed that “fair deals” would be reached not only with China, but with every trading partner.

Our North America correspondent reports that the tariff reprieve may signal a tactical shift by the White House, as economic fallout mounts. However, the deepening rift with China suggests that a resolution to the trade war remains far from reach.