US pauses higher tariffs after market havoc

President Donald Trump has announced a 90-day pause for countries hit by higher US tariffs but a trade war with China has escalated.

In a dramatic change of policy, just hours after levies against roughly 60 of America's trading partners kicked in, Trump said he was authorising a universal "lowered reciprocal tariff of 10 per cent" as negotiations continued.

At the same time he increased tariffs on goods from China to 125 per cent, accusing Beijing of a "lack of respect" after it retaliated by saying it would impose tariffs of 84 per cent on US imports.

This comes a week after Trump announced import taxes on all goods entering the US, in the biggest upheaval of international trade in decades.

His plan set a baseline tariff of 10 per cent on all imports —  which remains in place — but also higher rates on partners the White House described as the "worst offenders" for what the President considers to be unfair trade practices.

This included the 27-member European Union, Vietnam, South Africa and many more —  all of which were due to be on the receiving end of US tariffs ranging from 11 per cent  to more than 100 per cent.

Major market turmoil followed Trump's announcement last week, with sell-offs sparking trillions in losses across the world, many Americans fearing price rises and some analysts predicting increased odds of recession.

On Wednesday, before Trump said he would suspend the higher tariffs on goods from countries other than China, the US government saw interest rates on its debt spike to 4.5 per cent — the highest level since February.