In brief
The S&P 500 jumped 7% and major indices climbed following Trump’s tariff changes and indications of negotiation with trade partners, despite ongoing tensions with China.
US stocks experienced a dramatic surge as President Donald Trump announced the suspension of higher tariffs for various trade partners, opting instead for a 10% import tax rate. The White House confirmed the retreat from proposed steeper levies for countries willing to engage in negotiations, while Trump stated that tariffs on Chinese goods would escalate to future levels of at least 125% “effective immediately.”This decision came swiftly, just after the implementation of previously announced tariffs impacting key trade partners, including a significant 46% levy on imports from Vietnam. In mid-afternoon trading, the S&P 500 surged by an impressive 7%, positioning it toward one of its best trading days in recent years. The Dow climbed over 6.7%, while the Nasdaq saw a rise of more than 10%.Paul Ashworth, Chief North America economist for Capital Economics, commented on the situation, noting that although Trump managed to mitigate the recent stock market decline, the waning bond market pressured him to reconsider his high tariff stance. He anticipates that Trump may revert to a universal 10% tariff as originally suggested during his campaign, albeit cautioning that negotiations, particularly with China, may take longer than expected. “Neither side appears likely to relent in the immediate future,” Ashworth noted, suggesting a possibility of talks but with a full rollback of tariffs looking increasingly improbable.
