President Trump Announces 90-Day Tariff Pause; Markets Experience Historic Surge

 

InvestorHire News

April 9, 2025

President Trump Announces 90-Day Tariff Pause; Markets Experience Historic Surge

In a move that sent shockwaves through global financial markets, President Donald Trump announced a 90-day suspension of most new tariffs, reducing the "reciprocal tariff" rate to 10%. This decision followed negotiations with over 75 countries that agreed not to retaliate against prior U.S. tariff actions. However, in a pointed escalation, tariffs on Chinese imports were increased to 125%, with the administration citing China's lack of respect for global market norms.

Market Response: A Historic Rally

The stock market responded with an unprecedented surge. The Dow Jones Industrial Average closed up 2,962 points, or 7.9%, marking its largest single-day point gain and closing at 40,608.45. The S&P 500 jumped 9.5%, while the Nasdaq Composite soared 12.1%, reflecting renewed investor optimism and marking one of the best days for U.S. markets since World War II.

Treasury Yields and Commodity Prices React

The bond market also experienced significant movements. The yield on the 10-year Treasury note spiked to 4.51%, reflecting investor concerns about inflation and fiscal policy. In the commodities market, oil prices jumped 4%, with Brent crude reaching $60 per barrel, as traders anticipated shifts in global trade flows.

Analyst Perspectives: Caution Amid Optimism

While the market rally was met with optimism, analysts urged caution. Marko Kolanovic, former chief strategist at J.P. Morgan, suggested that the severe bond-market selloff likely influenced the administration's decision to pause tariffs. He advised investors to remain vigilant, noting that upcoming corporate earnings reports could reflect ongoing trade uncertainties.

International Reactions: China's Retaliation and Global Implications

Despite the positive market response, tensions with China escalated. Beijing announced an increase in tariffs on U.S. goods to 84%, effective immediately, and imposed restrictions on 18 U.S. companies, primarily in defense-related industries. China's finance ministry stated that these measures were in direct response to the U.S. tariff actions, accusing the U.S. of undermining the rules-based multilateral trading system.

The European Union also expressed concern, with member countries backing countermeasures against U.S. tariffs on steel and aluminum. The EU's proposed actions aim to protect their economies from the ripple effects of the U.S.-China trade war.

Looking Ahead: Uncertain Futures in Global Trade

While the 90-day tariff pause offers temporary relief to certain sectors and markets, the escalation with China underscores the complexities of the current trade landscape. Analysts predict that the ongoing disputes could have long-term implications for global economic growth, supply chains, and international relations.

As the administration navigates these challenges, stakeholders across industries and governments will be closely monitoring developments, hoping for resolutions that promote stability and growth in the global economy.