10
Loading video...
By Gabe Whisnant and Sonam Sheth
0
Share
Newsweek is a Trust Project member
See more of our trusted coverage when you search.Prefer Newsweek on Googleto see more of our trusted coverage when you search.
The Nasdaq Composite surged 12.6 percent by market close on Wednesday, its largest one-day jump since January 2001, after President Donald Trump abruptly reversed course by pausing most of his tariffs on United States trading partners for 90 days.
The S&P 500 index also soared 9.5 percent, its one-day biggest spike since 2008 and one of its most significant gains since World War II, after Trump announced the 90-day pause. The Dow Jones Industrial Average went up 7.87 percent, its biggest increase since March 2020.
Economists warned not to overplay the market's rally, however, saying there will be continued uncertainty over the next 90 days and adding that the president has offered no clarity about what will come after the pause is lifted.
Read More on Politics
The U.S. will also almost certainly see adverse effects from a 125 percent tariff Trump announced against China—the U.S.'s third largest trading partner—in response to an 84 percent retaliatory tariff China levied against the U.S.
Why It Matters
Wall Street immediately rallied after Trump announced his decision on Truth Social. He said he made it after seeing people being "yippy" and "queasy" amid continued losses in the stock and bond markets.
The president also pointed to comments that Jamie Dimon, the head of JPMorgan Chase, made Wednesday morning when he said that a recession was a "likely outcome" of Trump's escalating trade war with allies and adversaries alike.
What To Know
Trump's announcement of a 90-day pause came hours after he urged investors to "be cool" amid the turmoil and told them it was a "great time to buy" into the market. It's not clear if he had already decided to pause tariffs when he published those posts.
According to a fact sheet the White House released elaborating on Trump's decision, the U.S. will roll back what it characterized as reciprocal tariffs on almost all nations, except China, whose tariffs will soar to 125 percent.
A 10 percent baseline tariff will remain in effect for all other nations, including the European Union, which was previously subject to a 20 percent reciprocal tariff from the U.S.
...
The EU approved a 25 percent tariff on U.S. goods earlier Wednesday, but that plan was thrown into question hours later when the White House said it would reduce its tariffs.
Canada and Mexico's tariffs will remain as is—25 percent on goods not covered by the USMCA trade agreement—and the U.S.'s sectoral tariffs on all steel, aluminum and auto imports will remain in place, according to the White House.
Many of Trump's billionaire backers celebrated after he announced the tariff pause.
Hedge fund titan Bill Ackman, who has repeatedly sounded the alarm over the market's steep drops, praised Trump for a "brilliantly executed" plan that reflects the "art of the deal," referring to Trump's book.
What People Are Saying
Commerce Secretary Howard Lutnick wrote on X, formerly Twitter: "[Treasury Secretary] Scott Bessent and I sat with the President while he wrote one of the most extraordinary Truth posts of his Presidency. The world is ready to work with President Trump to fix global trade, and China has chosen the opposite direction."
Kentucky Senator Rand Paul told Punchbowl News: "I hope there's a lesson learned. When you add a bunch of tariffs, you'll lose six trillion in the marketplace. When you get rid of the tariffs, guess what, it comes bounding back."
Cato Institute Vice President of General Economics Scott Lincicome told CNN: "Markets are relieved a bit, but I don't know how you could possibly think the U.S. is a sound, safe and stable place to invest when the president is flipping tariffs on and off like a light switch and there could be more of these things in a mere 90 days. So a bit of a reprieve, but we're definitely not out of the woods."
Adam Crisafulli, the founder of Vital Knowledge, told CNBC: "Given how depressed stock prices and sentiment had become, the 90-day pause is sparking a violent rebound, and delaying implementation certainly removes a giant overhang from the market. But tariffs are not going away. China's tariff rate is now in triple digit territory, and who knows what happens in 90 days when this pause concludes."
What Happens Next
The U.S. will temporarily suspend its plan to levy reciprocal tariffs on most countries—with the exception of China—for three months.
Update 4/9/25 4:47 p.m. ET: This article was updated with additional information.
View 0 Comments
Submit Correction
View Editorial & AI Guidelines