(Photo: AFP)

Trump's turnabout, which came less than 24 hours after steep new tariffs kicked in on most trading partners, followed the most intense episode of financial market volatility since the early days of the COVID-19 pandemic. 

But enormous tariffs will remain on China, the world’s second-largest economy. In fact, Trump said they will be increased to 125% from 104% after China announced additional retaliatory tariffs against the United States earlier Wednesday.

All other countries that were subjected to reciprocal tariff rates Wednesday will see rates go back down to the universal 10% rate, he said.

The 90-day freeze does not apply to duties paid by Canada and Mexico, because their goods are still subject to 25% fentanyl-related tariffs if they do not comply with the US-Mexico-Canada trade agreement's rules of origin. Those duties remain in place for the moment, with an indefinite exemption for USMCA-compliant goods.

Wall Street breathed a sigh of relief, however, that Trump was backing down on other extreme trade measures. Stocks rallied sharply on the news – even though the 10% universal tariff on all imports coming into the United States remained in effect.

The Dow surged nearly 3,000 points or 7.87%, on Wednesday. The S&P 500 shot up 9.5%. The tech-heavy Nasdaq soared 12.2%. The relief spread through Asian markets as they opened on Thursday with Japan's Nikkei index surging almost 9%.