US stocks rocketed higher on Wednesday following Trump's shock move to pause many new tariffs.
US President Donald Trump on Wednesday announced a 90-day pause on his sweeping tariffs on all countries, barring China - a move that seemed nearly impossible just 24 hours ago. According to Trump, who had introduced the slew of tariffs to address the alleged trade imbalance with the US, over 75 countries had negotiated and not retaliated against him - which led to the pause. During the 90 days, a significantly reduced reciprocal tariff of just 10 per cent would be in effect, he said.
For China, however, Trump announced an immediate increase in tariffs on China to 125 per cent, up from the previously declared 104 per cent.
"Based on the lack of respect that China has shown to the World's Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately. At some point, hopefully in the near future, China will realize that the days of ripping off the US and other countries, is no longer sustainable or acceptable," he wrote on Truth Social.
"China wants to make a deal. They just don't know how quite to go about it...President Xi Jinping is a proud man. They don't know quite how to go about it, but they'll figure it out," he added.
Why did Trump hit a pause on tariffs?
For days, fellow Republicans and business executives had been insisting the US President to stop the tariffs, given the fear of a major trade war, triggering a global market meltdown, and raising concerns of a looming global recession. However, he stayed put, saying, "My policies will never change".
By Wednesday, it had become clear that the campaign to convince Trump to go back on the tariffs would not change as they had come into effect.
However, a growing alarm inside the Treasury Department over the developments in the bond market was the only factor that made Trump hit a pause on his reciprocal tariff regime, reported CNN. According to the report, US Treasury Secretary Scott Bessent raised the concerns to Trump, while White House economic officials briefed him on the accelerating selloff in the US Treasury market.
As Trump addressed reporters after the announcement of the pause on tariffs - it indicated that the decision was more of an impulse-driven one rather than a mapped-out strategy.
"The bond market is very tricky, I was watching it. The bond market right now is beautiful. But yeah, I saw last night where people were getting a little queasy. We didn't have access to lawyers, or it was just wrote up. We wrote it up from our hearts, right? It was written from the heart, and I think it was well written too, but it was written from the heart," he said.
"I thought that people were jumping a little bit out of line...They were getting yippie, you know, they were getting a little bit a little bit afraid. You have to be flexible," he said.
US stocks surged
Wall Street stocks rocketed higher on Wednesday following Trump's shock move to pause many new tariffs, lifting an equity market beaten down by days of losses amid rising recession worries. Within moments of the announcement, the Dow index surged ahead around 2,500 points along the way to a nearly eight-percent gain on the session. While, the tech-rich Nasdaq gained 12.2 percent to notch its best day in 24 years, and the S&P 500 surged 6.0 percent higher to 5,281.44 points.
Oil prices jumped more than four percent, while the dollar also strengthened.
India impact
Ever since Trump imposed a 26 per cent customised reciprocal tariff on Indian imports, the Indian markets have taken a plunge. However, with the 90-day pause, the stocks are likely to get a breather, with New Delhi getting more time to work on the deal with the US.
Ministry of External Affairs Spokesperson Randhir Jaiswal on Wednesday said that reciprocal tariffs and discussions are ongoing between India and US Trade teams for an expeditious conclusion of a mutually beneficial multi-sectoral bilateral trade agreement.
"India and the United States are very strong partners when it comes to trade relations, economic relations, investment relations, commercial relations, and we hope that these relations will continue to foster and deepen. As far as trade issues are concerned, we are in negotiations for a bilateral trade agreement, and hopefully we will be able to address these issues and conclude this particular agreement expeditiously," he said.
