In a dramatic shift that jolted Wall Street into a
rally, President Donald Trump said he would temporarily suspend tariffs on many
U.S. trading partners while sharply increasing them on Chinese imports.
The move reversed course less than 24 hours after
steep new levies had taken effect and triggered a global market rout. The White
House confirmed that tariffs on countries willing to enter negotiations would
be paused for 90 days, during which the U.S. aims to strike new trade deals.
Meanwhile, Trump raised tariffs on Chinese imports to
125%, up from the 104% rate enacted just hours earlier, escalating tensions
with the U.S.’s largest economic rival, Trump announced on Truth Social.
Stocks Surge as Tariff Tensions Ease
U.S. equity markets surged on the news, with the
S&P 500 gaining nearly 9% and the Nasdaq climbing more than 12%. The rally
followed days of losses driven by fears that aggressive tariffs would tip the
economy into recession.
Bond yields, which had been climbing earlier in the
day, retreated as investors recalibrated expectations. The dollar also regained
strength, particularly against safe-haven currencies like the yen. In the digital asset space, Bitcoin reversed its downward momentum, rising 8% after the latest development.
Markets welcomed the tariff pause as a sign that the
administration might avoid all-out trade conflict with allies. However, for
China, the message was the opposite. The sharp increase in duties marks the
latest escalation in an increasingly unpredictable standoff. Trump’s sudden tariff reversal fits a broader pattern
of shifting trade positions that have left world leaders and investors uneasy.
“Based on the fact that more than 75 Countries have
called Representatives of the United States, including the Departments of
Commerce, Treasury, and the USTR, to negotiate a solution to the subjects being
discussed relative to Trade, Trade Barriers, Tariffs, Currency Manipulation,
and Non-Monetary Tariffs, and that these Countries have not, at my strong
suggestion, retaliated in any way, shape, or form against the United States, I
have authorized a 90-day PAUSE, and a substantially lowered Reciprocal Tariff during
this period, of 10%, also effective immediately. Thank you for your attention
to this matter!” Trump said.
Flip-Flopping Fuels Uncertainty
“With all the craziness that this (US) administration seems
to like to create, we are seeing a lot of volatility, which is great for
trading,” commented Scott Sheridan, CEO of tastytrade, according to a report by
financemagnates.com.
“We are seeing 100-point S&P moves on a daily basis,
which is amazing for all trading and especially derivatives. So long as the VIX
stays elevated relative to its average, I would expect the big swings to
continue.”
Whether Trump’s 90-day pause leads to concrete trade
agreements or simply delays another round of tariffs remains uncertain. U.S.
officials say negotiations could span economic, security, and foreign aid
matters, but no timeline has been offered. For now, markets are clinging to hopes of resolution
despite the lingering risk of another sharp turn.
This article was written by Jared Kirui at www.financemagnates.com.
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