Markets Soar as Trump Hits the Brakes on Tariffs
Wall Street bounced back in dramatic fashion Wednesday after President Donald Trump announced a 90-day delay on certain tariffs—excluding those targeting China. The move sparked a massive relief rally in markets that had been battered by trade war fears.
The S&P 500 jumped 9.5%, posting its best one-day percentage gain since October 2008. The Dow Jones Industrial Average surged 2,962 points, or 7.9%, in its strongest performance since March 2020. The Nasdaq Composite led the pack, skyrocketing 12.2%—its biggest single-day gain since January 2001.
Markets had been under intense pressure since Trump unveiled sweeping tariffs on April 2. With stocks deeply oversold, investors were quick to seize on the shift in tone from the White House.
“New U.S. tariff rates were not sustainable, and today, the Trump administration finally admitted it,” said Michael Arone, chief investment strategist at State Street Global Advisors. “Investors got their first piece of good news in over a week.”
Trump’s social media post outlined the new approach: China would face a steep tariff hike to 125%, up from 104%, while other countries would see a reduced baseline rate of 10% for the next 90 days. This update came just 15 hours after “liberation day” tariffs kicked in, which had imposed a 20% rate on EU imports, 24% on Japanese goods, and 25% on South Korean products.
The decision appeared to single out China as the main adversary in Trump’s trade war, a stance markets seemed more comfortable with after a previous round of China-focused tariffs earlier in his presidency.
Tuesday’s S&P 500 close at 4,982.77, the lowest since April 19, had brought the index to the brink of a bear market, setting the stage for Wednesday’s rebound.
“This is the biggest rally I’ve ever seen—and it’s stunning,” said Louis Navellier, founder of Navellier & Associates. “Will we revisit the lows? Probably not. This looks decisive. Clearly, Trump is watching the markets—and he reacted.”
Behind the scenes, many believe mounting pressure in the bond market also influenced the policy reversal. A surge in Treasury yields, with the 10-year climbing to 4.293%, signaled investors were abandoning the usual safe-haven trade, raising fears of a liquidity crunch that could force Federal Reserve intervention.
While the rollback eased immediate recession concerns, risks remain. Stocks had plunged after the initial April 2 announcement on fears the tariffs would tip the economy into a downturn. Economists at Goldman Sachs briefly made recession their base-case scenario Wednesday morning—only to revise that call after Trump’s announcement.
Volatility is likely to persist, said State Street’s Arone. “The trade war isn’t over,” he said, “but at least for today, investors have won a round.”
