Trump’s Tariff Reversal Sparks Market Chaos

Trump Tariff Pause Triggers Historic Surge in US Stocks.

US stock prices surged following President Donald Trump's announcement to suspend significant tariffs on goods from most nations, opting instead for a 10% import tax rate.

The White House indicated a retreat from imposing higher tariffs on trade partners willing to engage in negotiations. However, Trump stated that tariffs on Chinese goods would be increased substantially, reaching at least 125% "effective immediately."

The S&P 500 experienced a remarkable increase of 9.5%, marking the largest single-day gain since 2008, after a period of market instability triggered by the tariffs.

stock exchange chart on the screen.

This decision by Trump came less than a day after the latest tariffs took effect, impacting major trade partners like Vietnam, which faced a new import levy of 46%.

The duties, which the president had revealed the previous week, were more extensive and severe than many on Wall Street had expected.

In the wake of this announcement, the S&P experienced a decline of over 10%, with numerous analysts expressing concerns about the escalating risk of an economic recession both in the US and worldwide.

By Wednesday, these anxieties had permeated the bond market, prompting investors to sell off US government debt.

"Although President Donald Trump was able to resist the stock market sell-off, once the bond market began to weaken too, it was only a matter of time before he folded," said Paul Ashworth, chief North America economist for Capital Economics.

He expressed his anticipation that Trump would revisit the proposal for a 10% universal tariff, which was advocated during his presidential campaign last year. However, he cautioned that reaching an agreement between the US and China would require time.

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"It is difficult to see either side backing down in the next few days," he said. "But we suspect that talks will eventually happen, although a full rollback of all the additional tariffs applied since Inauguration Day appear unlikely."

The Dow Jones Industrial Average concluded the day with an increase of over 7.8%, while the Nasdaq Composite surged by more than 12%.

Notable companies such as Nike, which produces approximately half of its footwear in Vietnam, experienced an 11% rise, and Apple saw a remarkable increase of around 15%.

However, despite these gains on Wednesday, the primary US indexes remained below their levels prior to Trump's announcement, with the S&P 500 down about 3% and more than 8% lower for the year.

The tariffs imposed on goods from China, which is the third-largest supplier of imports to the United States, continue to pose an economic challenge.

Last year, China exported over $400 billion worth of goods to the US, accounting for an estimated 60% of footwear imports and approximately 36% of clothing imports in January, as reported by the American Apparel and Footwear Association.

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Prior to Trump's announcement, the National Retail Federation had cautioned that shipments processed by US ports in May were expected to be 20% lower than the previous year due to the tariffs.

In subsequent remarks following his decision on Wednesday, Trump expressed his desire to negotiate a deal with China and mentioned the possibility of granting tariff exemptions to specific companies, marking a departure from his earlier statements.

He remarked, "I saw last night where people were getting a little queasy," acknowledging the apprehensions while indicating his ongoing commitment to essential strategic sectors, including automotive, steel, and aluminum, while also considering other industries like pharmaceuticals and lumber.

His choice to temporarily suspend the so-called reciprocal duties came in response to increasing political pressure from Washington and influential supporters from his previous presidential campaign, such as Tesla CEO Elon Musk, billionaire Bill Ackman, and Barstool Sports founder Dave Portnoy.

However, this sudden reversal surprised many.

Coinciding with Trump's announcement on social media, Goldman Sachs released a report forecasting a recession in the US economy due to the high tariffs.

President Trump in the Presidential Suite at Walter Reed

Just two hours later, the bank adjusted its earlier prediction, stating that even with lower tariffs than those announced by the president last week, it anticipated minimal growth for the year and assessed the likelihood of a recession at 45%.

Mr. Ackman, who had previously advocated for a 90-day pause on tariffs, expressed his gratitude to the president on social media: "Thank you on behalf of all Americans," he stated.

In the end, this entire episode reveals the recklessness of Trump’s economic strategy. The tariffs were unnecessary, poorly thought out, and driven more by ego than logic. Their sudden suspension only highlights how detached Trump is from the real-world impact of his decisions.

While the wealthy and well-connected may profit off the chaos, it’s ordinary Americans—workers, small businesses, and consumers—who are left footing the bill. This isn’t leadership; it’s a dangerous game with people’s livelihoods. Trump isn’t negotiating for the country—he’s gambling with the economy, and it’s clear who he’s really looking out for: himself and his billionaire buddies.