Trump Halts Global Tariffs, China Faces 125% Rate Hike

President Trump revealed a 90-day pause on reciprocal tariffs for most countries, which sparked one of the most remarkable market rallies in recent history. The S&P 500 surged 9.5% and delivered its best performance since October 2008. The Nasdaq reached even higher with a 12.2% gain, marking its second-best day ever.

The announcement excluded China and raised Chinese tariffs to 125%. More than 75 trading partners reached out to discuss trade issues with the United States. This dramatic policy move came right after higher reciprocal tariffs had affected goods from nearly 90 nations. The new baseline tariff rate settled at 10% for imports from more than 180 countries during the 90-day pause period. This change brought immediate relief to global trade tensions that had previously thrown markets into turmoil.

Wall Street Celebrates as Markets Post Historic Gains

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Wall Street saw a historic rally Wednesday when investors cheered President Trump’s tariff pause announcement. The S&P 500 jumped 9.5%, its strongest daily gain since October 2008 and third-biggest surge since the 1940s. The tech-focused Nasdaq Composite leaped 12.2%, marking its largest rise since January 2001 and second-biggest jump ever. The Dow Jones Industrial Average climbed 7.8% and added about 2,962 points to end at 40,608.45.

This powerful comeback marked a sharp reversal after days of market volatility. The S&P 500’s market value grew by AED 14.69 trillion in just one trading session. Every major S&P 500 sector closed higher, with tech stocks leading the pack as they surged 14.15%.

Tech giants emerged as big winners. Nvidia’s stock soared 18.7%, bouncing back from recent steep losses. Apple shares shot up 15.3%, helping the company become the world’s most valuable public firm again with a market value of AED 10.98 trillion. Tesla’s stock rocketed 22.7%, boosting the tech sector’s stellar performance.

The market’s strength showed everywhere as 98% of S&P 500 stocks moved higher. The S&P Auto Index made history with its biggest one-day gain, jumping nearly 21%. Recession-sensitive companies got a big boost too, with consumer discretionary stocks rising 12%.

Trading hit record levels as 30.5 billion shares changed hands on U.S. exchanges. This volume was way above the 18.06 billion average from the previous 20 sessions.

The market’s explosive response showed just how pessimistic investors had been before the news. As one market analyst put it, “the scale of the rally triggered by Trump’s retreat is a reminder of just how gloomy sentiment was only a few hours earlier”.

Trump Reverses Course on Global Tariff Strategy

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President Donald Trump made a surprising reversal by suspending his “reciprocal tariffs” on dozens of countries Wednesday. The suspension came just 13 hours after the tariffs took effect. Global stock markets had lost trillions of dollars during four days of intense financial volatility.

The White House described this sudden change as part of a thought-out negotiating approach. Trump told reporters “You have to be flexible,” though he had earlier insisted his tariff policies would stay unchanged. The 90-day freeze left out China, where Trump actually increased duties to 125% from 104%. This decision added more tension with the world’s second-largest economy.

The change happened after China hit back at Trump’s earlier tariff increases with 84% duties on American goods. White House press secretary Karoline Leavitt stated, “When you punch at the United States of America, President Trump is going to punch back further”.

A 10% baseline duty still applies to almost all U.S. imports. The duties on autos, steel, and aluminum remain unchanged.

Treasury Secretary Scott Bessent supported the reversal and said it rewarded countries that avoided retaliation. “We will see what China does but what I’m certain of is what China is doing will affect their economy much more than ours,” Bessent said.

China stood firm and promised to “follow through to the end” if the U.S. continues. China’s Commerce Ministry declared, “History and facts have proven that the United States’ increase in tariffs will not solve its own problems”.

The Chinese government added 11 American companies to an “unreliable entities” list and filed a new complaint at the World Trade Organization. Goldman Sachs lowered China’s GDP growth forecast to 4% for 2025, down from 4.5%, citing negative effects from tariffs.

European Commission President Ursula von der Leyen called Trump’s decision “an important step towards stabilizing the global economy”. Most trading partners welcomed the chance to negotiate.

How Will This Tariff Relief Impact Different Economic Sectors?

The 90-day tariff pause affects different economic sectors differently, yet Chinese goods still face steep 125% duties. Trade and tariffs have become the biggest problem for manufacturing firms, with 30% of CFOs now listing it as their primary concern – a sharp rise from 8.3% last quarter.

The baseline 10% duty continues to affect industries that depend on imports, despite the pause. Car manufacturers, steel producers, and aluminum exporters still deal with 25% tariffs, even with the broader relief measures. Goldman Sachs still expects minimal economic growth and puts the chance of recession at 45%.

Pharmaceutical and medical device companies face unique challenges from these tariffs. Many products that used to enter duty-free now cost more, which could drive up prices for needed medications. Medical technology companies tried to get exemptions like they did during Trump’s first term, but haven’t received any blanket waivers this time.

The retail sector sees varying effects. Grocery prices will likely rise first because stores restock perishables frequently. Experts predict clothing and textile prices will jump by 17%, while tariffs on building materials could add AED 33,781.85 to new home costs.

Chinese Amazon sellers face what they call an “unprecedented blow” during this adjustment period. Many plan to raise prices or leave the U.S. market completely. Vietnam, which makes half of Nike’s shoes and 39% of Adidas’s products, risks losing up to 40% of its total goods exports if future talks fail.

Price increases on necessities hit low-income families hardest. The original tariff policy could cost households at the bottom of the income scale AED 3,598.50 yearly, which shows how tariffs affect different social groups unequally.

The EU had approved 25% retaliatory tariffs on AED 84.45 billion worth of U.S. goods before Trump announced the pause. This shows how quickly trade disputes can escalate without diplomatic solutions.

Wall Street analysts see Trump’s tariff relief announcement as a defining moment that could reshape global trade relations. Nobody knows yet if it will work in the long run. The stock market’s historic rally sent clear signals as the S&P 500 surged 9.5% and Nasdaq jumped 12.2%. These numbers showed how investors reacted positively when trade tensions eased.

Trump’s selective approach targets China with increased 125% tariffs instead of pursuing complete trade liberalization. This strategic move has encouraged more than 75 trading partners to start talks with the United States. The economic standoff with China has intensified significantly.

Many economic sectors still face challenges despite this relief. Manufacturing companies struggle with the baseline 10% duty. Automotive and metal industries must operate under existing tariff structures. Retail and consumer goods sectors now prepare to adjust prices, especially for basic items that affect low-income households.

Global trade sits at a turning point now. European leaders welcome these changes warmly. China’s exclusion from relief measures hints at ongoing friction between the world’s largest economies. The next 90 days will tell us if this temporary pause creates lasting trade agreements or just delays bigger economic battles ahead.