Stocks surged on Wednesday afternoon, ripping higher after President Trump said he would back down on tariffs for most of the world for the next 90 days, citing new talks with foreign nations.
The S&P 500 climbed over 7 percent in a matter of minutes after Mr. Trump posted the decision on Truth Social, sharply reversing days of losses. But Mr. Trump said that the pause did not extend to China and that he would instead raise tariffs on its exports to 125 percent after Beijing announced a new round of retaliation.
Beijing had earlier added its own 50 percent levy on American goods in response, bringing the total tariff on U.S. exports to China to 84 percent. There remained some confusion about whether a 10 percent U.S. tariff across countries would remain in place.
The news offered a welcome reprieve to investors after markets had been uprooted by Mr. Trump’s announcement of across-the-board tariffs on dozens of countries. Those initially took effect on Wednesday, before Mr. Trump’s reversal.
Even after the S&P 500’s sharp rise, the index remains roughly 12 percent below its recent high, in February. The tech-heavy Nasdaq Composite index rose 8 percent on Wednesday and is still almost 18 percent below its December high. The Russell 2000 index of smaller companies more exposed to the outlook of the economy remains over 22 percent below its November high.
Earlier in the day, when stocks were still oscillating between small gains and losses, Mr. Trump posted “BE COOL” on his Truth Social platform, before adding, “THIS IS A GREAT TIME TO BUY!!!”
Wednesday was the best day for the S&P 500 since March 2020 and the market recovery from the early pandemic-induced sell-off.
Oil prices rose and the U.S. dollar inched higher, though it was still lower for the day. The yield on short-dated government debt also rose, a sign of investors dialing back expectations for interest rate cuts to prop up the economy after the threat of tariffs had been reduced. Other measures of worry also eased.
“So a 90-day pause on tariffs on ‘non-retaliating countries,’ and for China their tariff rate now goes to 125 percent,” said Peter Boockvar, chief investment officer of Bleakley Financial Group. “Respite? Further economic suicide? It will all depend on where you source product from, of course, and unfortunately about $450 billion is still being imported from China.”
Stocks in Asia and Europe, which had closed for trading before Mr. Trump’s new tariff announcement, mostly slumped: Taiwan was the worst hit, sinking more than 5 percent, while benchmark indexes fell more than 3 percent in Japan.
The Stoxx Europe 600 fell 3.5 percent and the FTSE 100 in London fell about 3 percent.
