Global markets rebound following Trump’s temporary tariff suspension

Department of Research, Studies and International News 10-04-2025

Stock markets worldwide experienced a wave of relief after U.S. President Donald Trump unexpectedly announced a temporary pause on recently implemented tariffs targeting numerous countries. The move eased fears of an intensifying global trade war and offered a momentary boost to investor confidence.

Asian markets were the first to respond, registering significant gains early Thursday amid growing speculation that the economic fallout from the ongoing trade tensions might not be as severe as initially anticipated. European exchanges, which had closed prior to Trump’s announcement on Wednesday, also opened higher the next day, reflecting similar optimism.

In the UK, the FTSE 100 surged by 6.2%, adding 485 points to reach 8,166. Germany’s DAX posted an even stronger increase of 7.8%, while France’s CAC 40 climbed 6.4%. Spain’s IBEX 35 followed with a 7.2% rise. The rally was largely driven by optimism that Trump’s 90-day suspension signaled a softening stance, even as broader trade disputes, particularly with China, continued to unfold.

This policy reversal came quickly, less than a full day after significant new tariffs were imposed on most of America’s key trading allies. The initial shock triggered massive volatility across global financial markets, erasing trillions of dollars in value and driving U.S. bond yields sharply higher. The extent of the market turmoil appeared to influence Trump’s decision.

“I think people were overreacting,” Trump commented when addressing reporters, suggesting that investors had become overly anxious.

U.S. markets reacted swiftly to the news. The S&P 500 index recorded a dramatic 9.5% gain, and the upward momentum carried into the next day’s trading in Asia. Taiwan’s stock index jumped 9.2% in early trade, while Japan’s Nikkei 225 rose by 7.2%. South Korea’s Kospi advanced over 5%, and Australia’s ASX 200 moved up more than 6%. Gains were more modest in Hong Kong and Shanghai, with their indices rising 2.69% and 1.29%, respectively.

On the London Stock Exchange, some individual stocks saw exceptional gains. Shares in Barclays rose 14%, while industrial engineering firm Melrose and financial services group St James’s Place saw increases of 12% and 11%, respectively.

In Washington, White House officials characterized the decision as part of a calculated strategy, describing it as a demonstration of Trump’s signature negotiation style, “the art of the deal.” However, the timing and sudden nature of the announcement sparked accusations of potential market manipulation.

Democratic Senator Adam Schiff called for an official inquiry, questioning whether any individuals within the administration might have profited from prior knowledge of the policy reversal. “The public deserves transparency,” he said, expressing concern over the potential for insider trading during such volatile policy shifts.

While futures markets in Europe predicted continued gains, early indicators from U.S. stock futures showed signs of hesitation, suggesting the rebound could be short-lived. Oil prices also slipped by around 1%, reflecting ongoing concerns that prolonged trade uncertainty could push the global economy closer to a downturn.

Since reassuming office in January, Trump has repeatedly issued threats of punitive economic measures against various trading partners, often reversing or softening his position unexpectedly. This erratic pattern has created confusion among international leaders and introduced an element of unpredictability that has unsettled business sectors globally.

U.S. Treasury Secretary Scott Bessent claimed that the tariff rollback was always part of a broader diplomatic strategy to encourage other nations to negotiate. Trump, however, later acknowledged that the dramatic market reaction after his 2 April tariff announcement likely influenced his change of course.

Despite previously asserting that his approach was unwavering, Trump admitted on Wednesday: “You have to be flexible.”

Nevertheless, he maintained a hardline stance toward China. Almost simultaneously with the suspension of general tariffs, Trump escalated levies on Chinese imports from 104% to 125%. This followed China’s retaliatory move to implement 84% tariffs on U.S. goods, responding directly to Trump’s earlier actions.

The Chinese government reiterated its commitment to countering U.S. pressure. Foreign Ministry spokesperson Mao Ning posted on social media: “We are not afraid of provocations. We don’t back down.”

While Trump hinted that a resolution with Beijing remains possible, White House insiders indicated that the administration would prioritize discussions with other countries. Vietnam, Japan, and South Korea were named among those expected to seek trade agreements in the near term.

As global markets stabilize, for now, the future of U.S. trade policy remains uncertain. Analysts and investors alike are watching closely, as further shifts in tone or policy could once again trigger widespread economic reverberations.