LIVE: EU to put tariff retaliation on hold for 90 days to match Trump's pause
European Commission chief Ursula von der Leyen earlier described the halt on reciprocal tariffs as “an important step towards stabilising the global economy"
Facing a global market meltdown, President Donald Trump on Wednesday (April 9) abruptly backed down on his tariffs on most nations for 90 days, but raised the tax rate on Chinese imports to 125 per cent.
It was seemingly an attempt to narrow what had been an unprecedented trade war between the US and most of the world to a showdown between the US and China.
90-day pause
The S&P 500 stock index jumped nearly 7 per cent after the announcement, but the precise details of Trump's plans to ease tariffs on non-China trade partners were not immediately clear.
Also read: Trump-speak: 9 bizarre things the US President said in the past week
Trump posted on Truth Social that because “more than 75 Countries” had reached out to the US government for trade talks and have not retaliated in meaningful way “I have authorised a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10 per cent, also effective immediately.”
The 10 per cent tariff was the baseline rate for most nations that went into effect on Saturday. It's meaningfully lower than the 20 per cent tariff that Trump had set for goods from the European Union, 24 per cent on imports from Japan and 25 per cent on products from South Korea.
Still, 10 per cent would represent an increase in the tariffs previously charged by the US government.
Market pressure
The announcement came after the global economy appeared to be in open rebellion against Trump's tariffs as they took effect Wednesday, a signal that the US president was not immune from market pressures.
Business executives were warning of a potential recession caused by his policies, some of the top US trading partners are retaliating with their own import taxes, and the stock market is quivering after days of decline.
Also read: China urges India to unite against Trump tariff ‘abuse’
White House press secretary Karoline Leavitt said the walk back was part of some grand negotiating strategy by Trump.
“President Trump created maximum negotiating leverage for himself,” she said, adding that the news media "clearly failed to see what President Trump is doing here. You tried to say that the rest of the world would be moved closer to China, when in fact, we've seen the opposite effect the entire world is calling the United States of America, not China, because they need our markets.” But market pressures had been building for weeks ahead of Trump's move.
Worried investors
Particularly worrisome was that US government debt had lost some of its lustre with investors, who usually treat Treasury notes as a haven when there's economic turbulence.
Government bond prices had been falling, pushing up the interest rate on the 10-year US Treasury note to 4.45 per cent. That rate eased after Trump's reversal.
Watch: Stock Market Mayhem: Is Your Money Safe? Buy, Hold or Sell
Gennadiy Goldberg, head of US rates strategy at TD Securities, said before the announcement that markets wanted to see a truce in the trade disputes.
“Markets more broadly, not just the Treasury market, are looking for signs that a trade de-escalation is coming," he said. "Absent any de-escalation, it's going to be difficult for markets to stabilise.” John Canavan, lead analyst at the consultancy Oxford Economics, noted that while Trump said he changed course due to possible negotiations, he had previously indicated that the tariffs would stay in place.
“There have been very mixed messages on whether there would be negotiations," Canavan said. "Given what's been going on with the markets, he realised the safest thing to do is negotiate and put things on pause.” Presidents often receive undue credit or blame for the state of the US economy as their time in the White House is subject to financial and geopolitical forces beyond their direct control.
What's not yet known is what Trump does with the rest of his tariff agenda. In a Tuesday night speech, he said taxes on imported drugs would happen soon.
Follow this space for live updates
Live Updates
- 10 April 2025 1:26 AM GMT
Asia shares jump after US stocks soar to historic gains when Trump pauses most of his tariffs
Asian shares surged in early Thursday trading, with Japan's benchmark jumping more than 2,000 point almost immediately after the Tokyo exchange opened, as investors welcomed President Donald Trump's decision to back off on most of his tariffs.
Analysts had expected the regional comeback given that US stocks had one of its best days in history on a euphoric Wall Street Wednesday, where investor hopes had run high that Trump would tone down the tariffs.
Japan's benchmark Nikkei 225 jumped 8.8% in morning trading to 34,510.86, zooming upward as soon as trading began. Australia's S&P/ASX 200 soared 5.1% to 7,748.00. South Korea's Kospi gained 5.2% to 2,412.80. Hong Kong and Shanghai markets were set to open soon. The Hang Seng index has fallen considerably in the last five days, and could be set for a rebound like the other regional indexes.
Stephen Innes, managing partner at SPI Asset Management, called the reaction “from fear to euphoria”.
“It's now a manageable risk, especially as global recession tail bets get unwound, and most of Asia's exporters breathe a massive sigh of relief,” he said, referring to the tariffs on China, which Trump has kept.
On Wall Street, the S&P 500 surged 9.5%, an amount that would count as a good year for the market. It had been sinking earlier in the day on worries that Trump's trade war could drag the global economy into a recession. But then came the posting on social media that investors worldwide had been waiting and wishing for.
“I have authorised a 90 day PAUSE,” Trump said, after recognising the more than 75 countries that he said have been negotiating on trade and had not retaliated against his latest increases in tariffs.
Treasury Secretary Scott Bessent later told reporters that Trump was pausing his so-called reciprocal tariffs on most of the country's biggest trading partners, but maintaining his 10% tariff on nearly all global imports.
China was a huge exception, though, with Trump saying tariffs are going up to 125% against its products. That raises the possibility of more swings ahead that could stun financial markets. The trade war is not over, and an escalating battle between the world's two largest economies can create plenty of damage. US stocks are also still below where they were just a week ago, when Trump announced worldwide tariffs on what he called “Liberation Day”.
But on Wednesday, at least, the focus on Wall Street was on the positive. The Dow Jones Industrial Average shot to a gain of 2,962 points, or 7.9%. The Nasdaq composite leaped 12.2%. The S&P 500 had its third-best day since 1940.
The relief came after doubts had crept in about whether Trump cared about the financial pain the US stock market was taking because of his tariffs. The S&P 500, the index that sits at the centre of many 401(k) accounts, came into the day nearly 19% below its record set less than two months ago.
That surprised many professional investors who had long thought that a president who used to crow about records for the Dow under his watch would pull back on policies if they sent markets reeling.
