Trump’s Tariff Pause Sends Markets Soaring

In a surprising turn of events, U.S. President Donald Trump announced a 90-day pause on newly imposed “reciprocal” tariffs, replacing them with a flat 10% rate across most U.S. trade partners. The announcement, made shortly after the tariffs officially took effect, sent shockwaves through global financial markets, sparking a powerful rally in stocks. Treasury Secretary Scott Bessent claimed the shift was part of Trump’s original strategy, though the sudden reversal left many investors questioning the administration’s consistency.

Trump’s social media post on Truth Social, telling Americans to “Be cool!” and encouraging buying activity, hinted that the pause was premeditated. Markets responded immediately: the S&P 500 jumped 7%, recording its best day in years. However, this dramatic rebound comes after four consecutive days of losses, reminding analysts of similar relief rallies seen during broader economic downturns.

Despite the market surge, the pause is not a permanent policy change. The flat 10% tariff is a temporary measure, intended to open a window for renegotiations with affected countries. Notably, China was excluded from the eased rate, as Trump raised tariffs on Chinese goods to 125% in response to what he described as China’s “lack of respect” for global trade norms. Beijing retaliated by raising tariffs on U.S. imports to 84% and targeting 18 American companies, mainly in the defense sector.

The policy pivot came just after tariffs on imports from nearly 90 countries took effect. While more than 75 nations reportedly contacted U.S. officials to begin talks, critics—including Senate Minority Leader Chuck Schumer—accused Trump of governing through chaos, citing the administration’s erratic handling of trade policy. Schumer noted that internal divisions and rapidly shifting strategies undermine confidence both domestically and abroad.

European and Asian markets responded positively. Japan’s Nikkei surged more than 8%, while European futures also climbed, reflecting global relief. However, U.S. stock futures and the dollar remained under pressure on Thursday, as doubts grew over the administration’s long-term economic strategy and policy direction.

Although Commerce Secretary Howard Lutnick praised the announcement as a decisive step forward in fixing global trade, many analysts remain skeptical. The continued tariffs on steel, aluminum, and autos, alongside the escalating trade battle with China, suggest that the broader trade war is far from over. Investors are now left trying to decipher whether this is a temporary market breather or a more significant policy shift.

Trump’s unexpected tariff pause has given markets a short-term boost and opened a diplomatic window. Still, with the 90-day deadline looming and China locked in a high-stakes standoff with the U.S., volatility is likely to persist. Investors and policymakers alike now await clearer signals on whether this is a tactical retreat—or just the calm before another storm.