By Toks David
US stocks soared to historic highs after President Donald Trump announced a 90-day pause on most “reciprocal” tariffs, reversing earlier levies that had rattled global markets.
The Dow Jones Industrial Average surged 2,963 points, or 7.9%, closing at 40,608, while the S&P 500 climbed 9.5%—its best day since 2008—and the Nasdaq jumped 12.2%. However, Trump escalated tensions with China, raising tariffs on Chinese goods to 125% from 104%, citing Beijing’s “lack of respect” for global markets.
The market rally followed days of turmoil, with the S&P 500 down 17% from its February peak before Trump’s announcement. China retaliated earlier that day, increasing tariffs on US goods to 84% from 34%, intensifying a trade war that has sparked fears of a global recession.
Treasury Secretary Scott Bessent, in a CBS News interview, framed the tariff hike as a response to “bad actors,” denying it was a full trade war, though tensions with China show no signs of easing.
Trump’s initial tariffs, effective at midnight on April 9, included rates like 20% on EU goods and 32% on Taiwan, contributing to a 12% S&P 500 drop over four days. The 90-day pause, setting a 10% baseline tariff for most countries, excludes Canada and Mexico, which face 25% duties. Markets had been on edge, with the Dow dropping 0.9% on April 7, reflecting fears of economic fallout from Trump’s aggressive trade policies.
Investors welcomed the tariff pause, but uncertainty lingers as the US-China trade war deepens. Goldman Sachs lowered its recession probability to 45% from 65%, though it warned of a 15% overall tariff rate increase. American consumers may face higher prices, while China could redirect exports, further straining global trade. Trump’s move aims to isolate China, but its long-term impact on the US economy remains unclear.
Trump claimed on Truth Social that “more than 75 countries” are negotiating trade solutions, hinting at potential resolutions. Yet, with China vowing to “fight to the end” and global markets still volatile, the trade war’s economic and political costs continue to mount. The historic rally offers temporary relief, but the US-China standoff threatens to reshape global commerce for years.