President Donald Trump's surprise 90-day pause on most reciprocal tariffs has failed to calm financial markets, as the U.S.-China trade war continues to escalate. The Dow Jones Industrial Average fell about 1,000 points on Thursday, while the S&P 500 and Nasdaq saw declines of 3.5% and 4.3% respectively [1].

The market volatility comes just a day after Wall Street experienced its biggest rally since World War II, following Trump's announcement of the tariff pause [1]. However, the White House clarified on Thursday that total tariffs on Chinese imports now stand at 145%, up from the previously stated 125% [1].

"The trade war is now turning into a direct confrontation between the US and China ... we could again be seeing escalation and de-escalation at the same time, pulling markets in different directions," Rabobank analysts said [1].

The pause applies to 75 countries that Trump claims haven't retaliated against his tariffs. However, a 10% baseline tariff remains in effect for most nations, while China faces the significantly higher rate [13]. The European Union has matched Trump's 90-day pause on its own retaliatory tariffs [11].

Trump's economic advisers are now working to determine the administration's priorities for upcoming trade negotiations with as many as 75 nations [4]. Kevin Hassett, director of the White House National Economic Council, told Fox News that the administration already has "offers on the table from more than 15 countries" [4].

Despite the pause, economists warn that significant damage may already be done. The Budget Lab at Yale University estimated on Thursday that even with the pause, Trump's current tariff regime would reduce a household's average disposable income by $4,364 [4].

The bond market played a crucial role in Trump's decision to pause the tariffs. As interest rates on 10-year U.S. Treasury notes approached 4.5%, concerns grew about the government's ability to find buyers for its debt [12]. Trump acknowledged that investors were getting "yippy" before his tariff pause [4].

As uncertainty continues to loom over global trade, many companies are using the tariff situation as cover to downsize and increase efficiencies [1]. The coming weeks and months are likely to see further market volatility as negotiations unfold and the impact of existing tariffs becomes clearer.