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Donald Trump announced a 90-day suspension of additional tariffs on several countries that are willing to engage in negotiations with the US, marking the initial step back from an escalated trade war.
Following Trump’s announcement, Wall Street experienced a rapid surge, with the S&P 500 jumping over 7 percent and the Nasdaq Composite rising nearly 9 percent.
This significant rally led to an approximately $3.2 trillion increase in the market value of the S&P 500 by 2 PM in New York on Wednesday, as calculated by the Financial Times using FactSet data.
However, Trump also highlighted China, imposing an increased tariff rate of 125 percent on the world’s second-largest economy, which complicates his trade confrontation with the nation.
“Considering that over 75 countries have reached out to discuss a resolution… and that these countries have not retaliated in any way against the United States upon my strong recommendation, I have authorized a 90-day PAUSE, with a significantly reduced Reciprocal Tariff of 10% during this period, effective immediately,” Trump stated in a post on Truth Social.
Yet, he remarked that China displayed a “lack of respect” by responding to US tariffs, hence he said, “I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately.”
This retreat by the US president occurred after a turbulent week in global markets, characterized by a loss of trillions in equity prices worldwide, sharp sell-offs in US bonds, and a drop in oil prices to levels reminiscent of the early coronavirus pandemic.
Commerce Secretary Howard Lutnick commented that the “world is ready” to collaborate with Trump to “rectify global trade,” while dismissing China as having “chosen the opposite direction,” as markets rallied on Wednesday following the president’s announcement.
In a post on X, the commerce secretary remarked that he and Treasury Secretary Scott Bessent “sat with the President while he penned one of the most remarkable Truth posts of his Presidency.”
Prior warnings from Wall Street banks suggested that the tariffs could lead to a recession in the US, exacerbating inflation and unemployment.
Stocks that had faced declines in recent days saw significant gains on Wednesday following Trump’s announcement. Companies like Tesla, Apple, and Nvidia surged over 10 percent, helping recover some of the substantial losses incurred since Trump unveiled his extensive tariff plans the previous week.
“As long as the tariffs are not implemented, it is beneficial from an economic standpoint. If the trade conflict remains limited to the US and China, it alleviates pressure on other nations and the global economy,” noted Eric Winograd from AllianceBernstein.
This de-escalation indicates the beginning of what is expected to be numerous trade negotiations between the US and its primary trading partners in the upcoming weeks, aimed at resolving commercial disputes.
Bessent announced on Tuesday that he would spearhead discussions with Japan, alongside Trump’s chief trade negotiator, Jamieson Greer, to pursue a deal that might lead to reduced tariffs.
This development follows several days of mixed signals from officials within the Trump administration regarding the permanence of the tariffs and the openness of the US to negotiations that might lower them.
Greer was providing testimony before the House of Representatives’ Ways and Means Committee when Trump made his pause announcement.
“WTF, who’s in charge?” exclaimed Steven Horsford, a Democratic lawmaker from Nevada, directed at Greer shortly after Trump’s announcement.
Horsford inquired if Greer was aware that the president had just paused the tariffs, to which Greer responded that he had known the proposal was “under discussion.”
Despite Trump’s pause on increasing tariff rates on many countries, he continues to uphold the 10 percent blanket levy on most imports that came into effect on April 5.
