Trump's announcement came less than 24 hours after steep new tariffs kicked in on imports from dozens of trading partners. The new trade barriers have hammered markets, raised the odds of recession and prompted retaliatory responses from China and the European Union.
Trump said he would raise the tariff on Chinese imports to 125 per cent from the 104 per cent level that took effect at midnight, further escalating a high-stakes confrontation between the world's two largest economies.
Trump said he would at the same time suspend targeted tariffs on other countries for 90 days to allow time for US officials to negotiate with countries that have sought to reduce them.
A 10 per cent blanket duty on almost all US imports will remain in place, the White House said. The announcement also does not appear to affect duties on auto, steel and aluminium that are already in place.
US stock indexes shot higher on the news, with the benchmark S&P500 up more than six per cent. Bond yields came off earlier highs and the dollar rebounded against safe-haven currencies.
Earlier on Wednesday, China and the European Union announced new trade barriers on US goods in response to the already-steep duties imposed by US President Donald Trump, escalating a global trade war that has hammered markets and raised the likelihood of recession.
China announced a tariff hike on US imports to 84 per cent from 34 per cent hours after Trump's punitive 104 per cent tariff kicked in.
The EU said it would impose 25 per cent tariffs on a range of US imports in a first round of countermeasures. The 27-member bloc faces US tariffs of 20 per cent on most products and higher duties on autos and steel. ountermeasures in Canada, a close US ally and major trading partner, also took effect on Wednesday.
Targeted US duties on dozens of other countries, from Japan to Madagascar, also took effect, the latest in a thicket of tariffs that are unwinding a global trading order that has been in place for decades. Tariffs in the world's largest consumer market now average above 20 per cent, according to various estimates, up from 2.5 per cent before Trump took office.
Japan and Canada have said they would cooperate to stabilise the global financial system - a task usually taken on by the United States during times of crisis.
Trump had shrugged off the market rout and offered investors mixed signals about whether the tariffs would remain in the long term.
"BE COOL! Everything is going to work out well. The USA will be bigger and better than ever before!" he wrote on social media earlier on Wednesday.
Trump has said the tariffs will help rebuild an industrial base that has withered over decades of trade liberalisation, though he says he is open to negotiating down those barriers with trading partners on a country-by-country basis. US officials, however, say they will not prioritise talks with China.
"The US escalation of tariffs on China is a mistake on top of a mistake, which seriously infringes on China's legitimate rights and interests and seriously undermines the rules-based multilateral trading system," China's finance ministry said in a statement.
Beijing also imposed restrictions on 18 US companies, mostly in defence-related industries, adding to the 60 or so American firms already punished over Trump's tariffs.
The White House had no immediate comment on China's latest retaliatory move. Earlier on Wednesday, China called its trade surplus with the United States an inevitability and warned it had the "determination and means" to continue the fight if Trump kept hitting Chinese goods.
Global drugmakers' stocks dropped across the board on Wednesday after Trump reiterated plans for a "major" tariff on pharmaceutical imports on top of existing duties.
Economists say Trump's tariffs could increase costs for the average US household by several thousands of dollars annually, which could become a political liability for a president who campaigned on lowering the cost of living.
