- US markets experienced dramatic gains after Trump announced a 90-day delay on most tariffs, with major indexes posting their largest single-day rallies in years.
- While China will still face increased tariffs (rising from 104% to 125%), all other countries will maintain 10% tariffs during the interim period.
- Market volatility is expected to continue for the next three months, but some analysts have withdrawn their recession forecasts following the policy shift.
Financial markets surged dramatically Wednesday after President Trump announced a significant modification to his administration’s tariff policies. US equity markets posted their largest single-day gains in years, with the Dow Jones Industrial Average climbing 2,600 points while the S&P 500 jumped 9.1%. Cryptocurrency markets also rallied, with Bitcoin and Ethereum gaining up to 6% and 11% respectively.
The market euphoria followed Trump’s unexpected announcement that tariffs on all countries except China would be delayed for 90 days. The administration specified that while other nations would receive this temporary reprieve, levies on Chinese imports would actually increase from the current 104% to 125%.
Policy Reversal Triggers Market Relief
Treasury Secretary Scott Bessent confirmed that tariffs for non-Chinese countries would remain at 10% during the three-month delay period. The policy adjustment represents a stark reversal from the administration’s previous hardline stance. Just days ago, Commerce Secretary Howard Lutnick had insisted there would be “no postponing” the tariffs, while White House Senior Counselor Peter Navarro had firmly stated “this is not a negotiation.”
The bond market also responded positively to the news, with the 10-year Treasury yield dropping to 4.3% after spiking to 4.51% overnight. Wednesday’s 10-year auction showed robust demand with indirect bidders—an approximate indicator of foreign interest—representing about 88% of accepted bids.
Improved Economic Outlook Despite Lingering Uncertainty
Despite the immediate positive market reaction, financial experts caution that uncertainty will persist during the 90-day evaluation period. However, the overall economic outlook has improved significantly following the policy adjustment. Both Apollo Chief Economist Torsten Slok and analysts at Goldman Sachs withdrew their previous forecasts for a 2025 recession on Wednesday afternoon.
The tariff modifications, branded as “Liberation Day” tariffs by the administration, signal a more flexible approach than initially indicated. While markets face continued volatility in the coming months as tariff policies remain in flux, investors appear to have received the delayed implementation as a sign that economic pragmatism may ultimately prevail over more hardline trade positions.
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