WASHINGTON, April 9 – In an abrupt policy reversal that sent shockwaves across financial markets, President Donald Trump announced on Wednesday evening that he would temporarily ease the sweeping tariffs he imposed just a day earlier on dozens of U.S. trading partners. The unexpected shift came after a dramatic bout of market volatility triggered deep concerns on Wall Street and across global exchanges.
The reversal, which softened some of the most aggressive trade restrictions implemented since Trump’s return to the White House in January, led to an immediate and powerful rally in global equities. U.S. markets rebounded strongly, with the S&P 500 (.SPX) closing nearly 10% higher. Asian markets followed suit as they opened Thursday morning, with Japan’s Nikkei surging close to 9%.
Trump Backs Off—But Doubles Down on China
Despite the broad easing of tariffs, Trump emphasized that China would remain under intense pressure. He announced that tariffs on Chinese goods would increase to 125%, up from 104%, escalating the ongoing economic standoff between the two largest economies. The hike marks yet another chapter in the tit-for-tat tariff war that has defined the renewed trade dispute over the past week.
Speaking to reporters at the White House, Trump said his decision to pause some of the newly imposed tariffs was influenced by the sharp and immediate fallout in the markets. “You’ve got to be flexible. Markets were reacting fast—too fast—and people were panicking,” he said. He compared the market’s response to a golf expression, saying investors were acting nervously and overreacting.
The temporary suspension includes a 90-day freeze on certain country-specific tariffs but retains a 10% blanket duty on nearly all imported goods into the U.S. Additionally, tariffs already in place on automobiles, steel, and aluminum will remain untouched. Countries like Canada and Mexico will continue to face 25% fentanyl-related tariffs unless their goods fully comply with the U.S.-Mexico-Canada Agreement (USMCA) rules of origin. However, USMCA-compliant goods are exempt for now.
White House officials insisted that the decision was not a retreat, but a strategic move to bring nations to the negotiating table. Treasury Secretary Scott Bessent, who is leading trade talks with multiple countries, claimed the tariff rollback was part of a broader plan. “This was calculated,” Bessent said. “We needed maximum leverage to get their attention and we got it.”
Global Reactions and Economic Outlook
The market rally following Trump’s announcement was immediate. Investors, who had been rattled by several days of massive selloffs, embraced the news as a sign of potential stability ahead. The dollar regained ground against traditional safe-haven currencies, and U.S. bond yields, which had spiked sharply in recent days, began to normalize.
However, economists and business leaders remain cautious. The sudden shifts in policy have introduced significant unpredictability into global trade dynamics. “The constant zigzag is making it extremely difficult for companies to plan ahead,” said one industry executive, who requested anonymity due to ongoing negotiations.
According to recent surveys, business investment and consumer confidence have both taken a hit in the wake of escalating trade tensions. A national poll released earlier this week showed that three out of four Americans expect consumer prices to rise in the near future due to the tariffs.
Even with the partial rollback, economists say the remaining duties are still substantial. Analysts at Goldman Sachs adjusted the probability of a recession down from 65% to 45% after Trump’s move but warned that overall tariff levels remain high enough to dent growth. The firm projected that current duties would still translate into an effective 15% increase in the total U.S. tariff burden.
Key international partners like Canada and Japan reacted to the United States policy shifts by reaffirming their readiness to intervene in markets if necessary—a role often taken by the U.S. during past financial crises. “We are closely monitoring the situation and stand ready to act if needed,” a Japanese finance official said during a Thursday morning briefing in Tokyo.
Meanwhile, the Chinese government has shown no signs of backing down. Analysts believe Beijing views any concession as a potential weakness and may prefer to endure short-term pressure rather than capitulate to demands. A trade policy analyst familiar with recent talks said China’s strategy is to endure the pressure and wait for the U.S to make a strategic misstep.
Trump remains defiant, suggesting that negotiations with other countries will take priority before resolving differences with Beijing. “China wants a deal,” he said. “But they’re not quite sure how to get there yet.”
In recent days, Trump has held phone conversations with leaders in Japan and South Korea, and hosted a trade delegation from Vietnam on Wednesday. According to officials, more than 75 countries have reached out to open dialogue since the April 2 tariff declarations.
Despite earlier White House denials that a pause was even being considered, Trump admitted he had been weighing the move for several days. “This isn’t about backing off,” he said. “It’s about giving smart people the time and space to make smart decisions.”
In an effort to calm nervous investors before making his announcement, Trump took to Truth Social with a message urging calm: “STAY CALM! Everything will turn out just fine. America is heading toward greater strength and success!” A few hours later, as the markets surged, he followed up with another message encouraging optimism: “NOW’S THE PERFECT TIME TO INVEST!!!”
The next few weeks will be critical in determining whether this tariff truce holds or if it’s merely a pause in what many fear could become a prolonged economic confrontation. For now, markets have taken a deep breath—but the underlying uncertainty remains.