Global shares surged this morning after Donald Trump said he would temporarily ease the hefty duties he had imposed on dozens of countries.
During the Asian trading session, European futures experienced significant gains. The EUROSTOXX 50 futures and DAX futures surged by almost 8% each, while FTSE futures saw an increase of 5.4%.
Japan’s Nikkei index similarly advanced more than 8 per cent.
Conversely, Wall Street showed a pause in its upward momentum following a strong rally in the previous session. Investors were grappling with the uncertainty surrounding the economic policies of the U.S administration.
Nasdaq futures fell more than 1% per cent and S&P 500 futures were off 0.8 per cent.
The dollar also lost steam as a trade war between the United States and China ratcheted up.
After a prolonged period of market decline that resulted in the loss of trillions of dollars in global stocks, President Trump’s announcement of a 90-day halt on some of the newly imposed tariffs on Wednesday provided some relief to investors.
In a dramatic climbdown, the US President said a blizzard of ‘reciprocal’ tariffs on countries worldwide would be put on hold to allow time for trade talks.
All nations except China now face a 10 per cent ‘baseline’ tariff on exports to the US for three months.
Donald Trump speaks as he signs executive orders and proclamations in the Oval Office at the White House in Washington, D.C., U.S., April 9, 2025
In a dramatic climbdown, Donald Trump said a blizzard of ‘reciprocal’ tariffs on countries worldwide would be put on hold- but escalated his trade war with China (Xi Jinping pictured)
But Mr Trump stepped up his trade war with Beijing, saying tariffs on Chinese goods would soar to 125 per cent after China responded with its own retaliatory tariffs.
Critics said last night that Mr Trump ‘blinked first’ just 24 hours after the White House said he had ‘a spine of steel that he will not break’.
He acknowledged that market turmoil had played a part in his decision to back down, telling reporters: ‘People were getting a little bit yippy, a little bit out of line.’
He insisted all countries, including China, would eventually agree ‘fair’ trade deals and put the US on a ‘transition to greatness’, but warned: ‘Nothing’s over yet.’
In the US, the Dow Jones index leapt by 6 per cent within minutes.
The climbdown came after bond-market investors began an unprecedented sell-off of US government debt, driving up borrowing rates for the Trump administration.
Investors are still struggling to come to terms with the U.S. administration’s uncertain economic policies, exacerbated by the latest volte face.
‘The world, political and financial is looking on with horror, not bemusement, at an administration that prioritises the signing of an executive order for more water-power in shower heads, on the same day that the bond market breaks and investors question the long-term credibility of the administration having flip-flopped on the largest of their policies, tariffs,’ said Martin Whetton, head of financial markets strategy at Westpac.
In the midst of all the chaos, Trump on Wednesday signed an executive order to ‘Make America’s showers again’, rolling back regulations limiting the flow of showerheads.
Stock market prices make a recovery on Thursday, as seen at the Indonesia Stock Exchange
Pedestrians are reflected on a stock market indicator board in Tokyo, Japan, 10 April 2025
The trade war has seen the dollar weaken – which could, in theory, make imports more expensive and raise export competitiveness.
But a stronger dollar would bolster the currency’s status as a world reserve currency, making it easier to borrow and giving the U.S. a powerful diplomatic tool overseas.
The dollar fell 0.8% against the yen and 0.6% on the Swiss franc, failing to sustain its jump against the two safe haven currencies in the previous session.
“I think the initial move was just massive short cover, and this has given the world a bit of a breathing space, except for China… because markets were starting to price in the worst-case scenario,” said Khoon Goh, head of Asia research at ANZ.
“But now that the dust has settled, I think markets will seem to sort of figure out where to go from here.”
Trump’s reversal on the country-specific tariffs is not absolute. A 10% blanket duty on almost all U.S. imports will remain in effect, the White House said.
The announcement also does not appear to affect duties on autos, steel and aluminium that are already in place.
He also heaped pressure on China, saying he would raise the tariff on Chinese imports to 125% from the 104% level that came into effect on Wednesday.
China on Wednesday raised additional duties on American products to 84% and imposed restrictions on 18 U.S. companies, mostly in defence-related industries.
Yet investors for now seemed to view the latest escalation of Sino-U.S. trade tensions with a narrow lens, choosing merely to focus on the 90-day window Trump has granted to dozens of countries.
Trump’s tariff plans caused a major sell-off of US government bonds
Britain was hit by the fallout, with the UK Government’s borrowing costs hitting their highest since 1998, raising the prospect of more tax rises and spending cuts.
After claiming that world leaders were ‘calling me up, kissing my a**…’, Mr Trump later urged American voters to ‘be cool’, saying: ‘Everything is going to work out well.’
But four hours later he ordered the tariff pause and sent US Treasury Secretary Scott Bessent to defend it at a White House press conference.
Mr Bessent claimed Mr Trump only ever intended to use the threat of tariffs against the rest of the world to generate ‘maximum negotiating leverage’. But he said China had revealed itself as the ‘bad actor’ in global trade by retaliating.
Press secretary Karoline Leavitt also made out that the past week of turmoil, which wiped trillions of dollars off the markets, was part of the plan, telling reporters: ‘Many of you in the media clearly missed the art of the deal. You clearly failed to see what President Trump is doing here.’
Last night, Mr Trump said there was ‘a lot of winning out there’, ‘we’re having a good day in the stock market’ and the US was ‘stronger than it’s ever been’. He added: ‘We had to take the medicine… to go through the operation.’
His tariffs briefly came into full effect yesterday, exactly one week after his ‘Liberation Day’ announcement stunned global markets. China was hit with an additional 50 per cent levy after retaliating, taking the total US tariff on Chinese goods to 104 per cent.
China, which has vowed to ‘fight to the end’, responded with an extra 50 per cent levy on US imports, taking its own total tariff rate to 84 per cent. Beijing described Mr Trump’s approach as ‘a mistake on top of a mistake’.
Trump said he was raising tariffs on Chinese goods to 125 per cent immediately thanks to Beijing’s ‘lack of respect’
Hedge fund billionaire Bill Ackman, who first floated the idea of a 90-day pause, warned publicly yesterday that the US economy would be punished if the President failed to intervene, adding: ‘Our stock market is down. Bond yields are up and the dollar is declining. These are not the markers of successful policy.’
The policy switch still leaves the world’s two biggest economies locked in a deepening trade war.
Mr Trump said he was raising tariffs on Chinese goods to 125 per cent immediately thanks to Beijing’s ‘lack of respect’.
Mr Bessent said Beijing’s policy of ‘escalating’ the trade dispute would backfire.
‘They sell us almost five times as much as we sell them so I think it’s an own goal by China,’ he said.
He said talks would begin with more than 75 countries that want better trade terms.
Mr Trump’s decision means heavier ‘reciprocal’ tariffs will be temporarily cut to 10 per cent.
This will benefit the EU, which faced a 20 per cent rate, as well as countries such as India (26 per cent) and Vietnam (46 per cent).
It will make no difference to the UK, which was already on the 10 per cent baseline.
Higher 25 per cent tariffs also remain in place on cars and on steel and aluminium.
Former Cabinet minister Kit Malthouse said any imposition of tariffs on pharmaceuticals would backfire on the US.
The chairman of the all-party group on life sciences added: ‘As a life sciences superpower, the UK is able to offer Americans hope in the fight against awful ailments. Why on earth would you tax these scientific miracles at your own border?’
Downing Street said: ‘A trade war is in nobody’s interests. We don’t want tariffs at all, so for jobs and livelihoods across the UK, we will coolly and calmly continue to negotiate in Britain’s interests.’
