President Trump has backed down on his “reciprocal” tariffs for 90 days. This move sent stocks soaring, with the S&P 500 rising 9.5 percent, its sharpest single-day gain since October 2008. Wall Street welcomed the policy reversal, as it meant Trump would not follow through with most of his tariff plans.
However, the relief does not extend to China, one of America’s biggest trading partners. Trump announced he would instead raise tariffs on Chinese exports to 125 percent after Beijing announced a new round of retaliation. The White House tried to suggest the pause was part of a premeditated strategy.
Press Secretary Karoline Leavitt accused reporters of failing to see what Trump was doing, while Treasury Secretary Scott Bessent said it was Trump’s “strategy all along.”
The abrupt change in course came amid a sell-off in U.S. bonds and days of deep losses in financial markets around the globe. Trump acknowledged his decision was made in response to the market turmoil, saying “you have to be flexible” and that “over the last few days it looked pretty glum.”
Before the pivot, Trump’s latest tariffs had hit nearly all U.S. trading partners. Beijing offered the starkest response, with a total levy of 84 percent on American-made products.
This left American companies that import from China still on edge. Trump’s trade representative, Jamieson Greer, told a congressional committee that the president was right to label the U.S. trade deficit a national emergency.
Trump pauses tariff policy
He called it “a manifestation of the loss of the nation’s ability to make, to grow and to build.”
A sharp sell-off in U.S. government bond markets showed concerns about the fallout of a trade war. The 10-year U.S. Treasury yield jumped to around 4.4 percent, up from below 4 percent at the start of the week. Rising yields push up the cost of borrowing for mortgages, credit cards, business loans and many other rates.
U.S. oil prices fell to about $56 a barrel, the lowest level in more than four years. The slide in crude prices signals deteriorating confidence in the economy and has spooked U.S. oil executives, many of whom had backed Trump. After the tariffs were paused, the prices climbed to more than $62.
In commercial and industrial hubs across Asia, businesses grappled with the effects of the levies. For some companies, U.S. tariffs have made China a more appealing place to produce in and buy from, as heavy tariffs on other Asian countries have eliminated some motivation to set up shops there. The chaos in the markets has caused a boost for financial news.
Viewership of Fox Business and CNBC has soared over the past week as Americans seek clarity on the current market duress. “Investors should brace for more market volatility in the coming weeks and months as Trump’s trade policy becomes more coherent,” said Michael Arone, a chief investment strategist at State Street Global Advisors. “The trade war may not be over, but at least for today investors have won the battle.”
