Wall Street saw one of its most dramatic turnarounds in a decade as U.S. stocks surged after President Donald Trump announced he would suspend sweeping tariff measures. Instead of harsh duties on goods from most countries, the U.S. will now impose a flat 10% import tax.
🔹 The S&P 500 jumped 9.5% – its biggest one-day gain since the 2008 financial crisis.
🔹 The Dow rose more than 7.8%, while the Nasdaq soared over 12%.
⚖️ Trump Retreats… But Not on China
While trade partners willing to negotiate were spared from higher duties, China saw the opposite. Trump announced an immediate increase in tariffs on Chinese goods to at least 125%, escalating the trade conflict between the world’s two largest economies.
The move came just hours after the latest round of tariffs took effect, hitting countries like Vietnam, whose exports now face a 46% import tax.
📉 Market Panic Preceded the Rally
Last week's announced measures were so aggressive and far-reaching that they triggered panic among investors. The S&P 500 had previously dropped more than 10%, and analysts began warning of an imminent recession.
Particularly alarming was the bond market’s reaction – investors began dumping U.S. government debt, signaling a broader crisis of confidence.
“Trump may have withstood equity sell-offs, but once the bond market began to weaken, the collapse was only a matter of time,” said Paul Ashworth, Chief North America Economist at Capital Economics.
🛑 A Return to the 10% Universal Tariff Idea
According to Ashworth, Trump seems to be reverting to his campaign-era plan for a universal 10% import tariff. A deal with China still appears distant, and neither side seems willing to compromise.
“We don’t expect full rollback of all additional tariffs, but negotiations are likely inevitable,” he added.
📊 Tech and Consumer Stocks Soar
The market reaction was immediate:
🔹 Nike, which produces half its footwear in Vietnam, jumped 11%.
🔹 Apple soared nearly 15%.
Despite the Wednesday rally, major U.S. indexes remain below pre-announcement levels – the S&P 500 is still down about 3% and more than 8% year-over-year.
📦 China Tariffs Remain a Major Concern
China, the third-largest supplier of U.S. imports, shipped over $400 billion worth of goods to America last year. According to the American Apparel & Footwear Association, China accounted for 60% of imported footwear and 36% of apparel as of January.
Before Trump's policy shift, the National Retail Federation warned that May shipments through U.S. ports would likely be 20% lower than the previous year due to tariffs.
🗣️ Trump: Hoping for a Deal, But Tariffs Stay in Key Sectors
After his Wednesday decision, Trump expressed hope for a deal with China, even as he suggested tariffs would remain in strategically important industries like automobiles, steel, aluminum, and potentially pharmaceuticals and lumber.
He also hinted at granting exemptions for individual companies, signaling a major softening of his earlier hardline stance.
“I saw people were starting to feel sick,” Trump said, acknowledging the public’s concern. He admitted that political pressure had mounted in Washington – even from key allies like Elon Musk, Bill Ackman, and Dave Portnoy – all of whom supported him during the last presidential campaign.
💬 Market Reaction: Goldman Sachs Reverses Forecast
Almost simultaneously with Trump’s announcement, Goldman Sachs released a report warning of a recession driven by steep tariffs. Just two hours later, the bank revised its outlook, now predicting minimal growth and a 45% chance of recession this year.
Investor Bill Ackman, who had called for a 90-day tariff freeze, praised the president on social media:
“Thank you on behalf of all Americans,” he said.
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