He got the message.
After cratering for days amid extreme volatility brought on by the trade war, US stocks soared on Wednesday afternoon after President Trump announced a 90-day tariff pause for some countries.
“I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately,” Trump said in a post to Truth Social.
Trump had faced mounting backlash from billionaires, companies, and investors in the week since he unveiled sweeping tariffs, all while insisting that the market crash was akin to taking medicine. Now, the president seems to be responding to the deep fears that his trade war has drummed up, with top voices like Jamie Dimon and big backers like Bill Ackman sounding the alarm on the potential damage to the economy
However, the trade war isn’t paused for everyone. Trump said he was raising the tariff rate on China to 125% from 104% due to a “lack of respect.”
Truth Social
Here’s where indexes stood around 1:31 p.m. ET. on Wednesday:
The enormous reversal follows what had looked to be another day of withering volatility in the stock market as investors navigated trade war uncertainty.
Investors’ worries on Wednesday were twofold: that the trade war was showing no signs of de-escalating and the bond market was showing signs of intense stress.
After Trump imposed a 104% tariff on China at midnight, the country retaliated with an 84% tariff on US goods.
The European Union also announced tariffs against about $23 billion of US goods, set to go into effect in mid-April. Those tariffs are in retaliation for Trump’s earlier tariffs on European steel and aluminum exports.
The immense uncertainty about the tariffs led Delta Air Lines and Walmart to pull their earnings guidance.
“With the level of uncertainty we’re seeing and the amount of changes happening on a daily basis in global trade, it’s very difficult to predict what policies may look like over the course of the year,” Delta’s CEO, Ed Bastian, said.
Bastian warned that his company was “acting as if we’re going into a recession.”
Meanwhile, Treasury bond yields surged, with the 10-year reaching an intraday high of 4.51%. The 10-year US Treasury yield is up nearly 50 basis points since last week.
Bank of America said the surge in Treasury yields served as a “confidence test” for investors, as concerns about higher inflation and a potential deficit spike linger.
Dario Perkins, an economist at TS Lombard, called the bond yield surge America’s “Liz Truss” moment, suggesting that incompetence among US policymakers was leading to a loss of confidence among investors.
“For the first time in my career, I’m hearing widespread skepticism about the competency of US policymakers. This isn’t about politics,” Perkins said. “It is about recklessness.”