Donald Trump’s surprise decision to pause the hefty tariffs he had just imposed on dozens of countries brought relief for battered global stock markets, even as he ratcheted up a trade war with China.
Markets across Asia rose sharply on Thursday on signs that the US president’s trade war may not prove as damaging to the global economy as feared.
European markets, which had closed when Trump announced the 90-day pause on Wednesday, jumped at the start of Thursday’s session. The FTSE 100 was up 6.2%, rising 485 points to 8166 points, continuing the relief rally. Germany’s Dax rose 7.8% while France’s Cac 40 was up 6.4%, and Spain’s IBEX 35 climbed 7.2%.
Trump’s U-turn, which came less than 24 hours after steep new tariffs kicked in on most trading partners, followed the most intense episode of financial market volatility since the early days of the Covid pandemic.
The upheaval erased trillions of dollars from stock markets and led to an unsettling surge in US government bond yields that appeared to catch Trump’s attention.
“I thought that people were jumping a little bit out of line, they were getting yippy, you know,” Trump told reporters after the announcement.
US stock indexes shot higher on the news, with the benchmark S&P 500 index closing 9.5% higher, and the relief continued into Asian trading.
Taiwan stocks soared 9.2% in early trading on Thursday. In Japan the Nikkei 225 was up 7.2%, while in Seoul the Kospi was up more than 5%. In Australia, the ASX 200 jumped more than 6%. Hong Kong’s Hang Seng index climbed 2.69%, while the Shanghai composite index jumped 1.29%.
On the FTSE 100, shares in Barclays rose 14%, with industrials company Melrose up 12% and investment firm St James’s Place rising 11%.
After the market surge, White House officials said “this was his strategy all along” and showed “the art of the deal” at work.
The moves triggered accusations of market manipulation. The Democratic senator Adam Schiff called for an investigation, saying: “These constant gyrations in policy provide dangerous opportunities for insider trading.
“Who in the administration knew about Trump’s latest tariff flip-flop ahead of time? Did anyone buy or sell stocks, and profit at the public’s expense? I’m writing to the White House – the public has a right to know.”
European futures also pointed to big gains but there were already signs the rally may be short-lived with US stock futures trading lower. Oil prices also fell about 1%, extending a grim spell fuelled by fears that the trade tensions could push the global economy towards recession.
Since returning to the White House in January, Trump has repeatedly threatened an array of punitive measures on trading partners, only to revoke some of them at the last minute. The on-again, off-again approach has baffled world leaders and spooked business executives.
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The US Treasury secretary, Scott Bessent, asserted that the pullback had been the plan all along to bring countries to the bargaining table. Trump, though, later indicated that the near panic in markets that had unfolded since his 2 April announcements had factored into his thinking.
Despite insisting for days that his policies would never change, he told reporters on Wednesday: “You have to be flexible.”
But he kept the pressure on China, the world’s second largest economy and the second biggest provider of US imports. Trump immediately increased the tariff on Chinese imports to 125% from the 104% level that kicked in on Wednesday.
Beijing may again respond in kind after slapping 84% tariffs on US imports on Wednesday to match Trump’s earlier tariff salvo. It has repeatedly vowed to “fight to the end” in the escalating trade war between the world’s top two economies.
“We are not afraid of provocations. We don’t back down,” China’s foreign ministry spokesperson Mao Ning posted on X on Thursday.
Trump said a resolution with China on trade is also possible. However, officials have said they will prioritise talks with other countries, with Vietnam, Japan and South Korea among those lining up to try to strike a bargain.
“China wants to make a deal,” Trump said. “They just don’t know how quite to go about it.”
Reuters contributed to this report
