Markets surge as Trump pauses tariff blitz – but uncertainty still reigns

Markets around the world breathed a sigh of relief as US President Donald Trump unexpectedly announced a 90-day pause on his sweeping tariff plans – offering temporary respite in what has been an escalating global trade war. However, key sectors remain under pressure, and many warn the worst may still be to come.

After days of insisting that aggressive tariffs would remain in place, Mr Trump reversed course late Wednesday, declaring that countries which had not retaliated against US duties would be granted a reprieve. Instead of the threatened 25 per cent levy, they will now face a 10 per cent blanket tariff until July.

“People were jumping a little bit out of line. They were getting yippy,” Mr Trump told reporters when asked why he decided to de-escalate.

The markets responded emphatically. The S&P 500 posted its strongest one-day gain since the 2008 financial crisis, surging 9.5 per cent. The Dow Jones rose by 7.9 per cent, and the Nasdaq Composite leapt by 12.2 per cent, led by rebounds in technology stocks including Apple and Nvidia.

European markets followed suit on Thursday morning, with the UK’s FTSE 100 up six per cent, France’s CAC 40 up 6.3 per cent, and Germany’s DAX climbing eight per cent – all reversing sharp losses posted before Mr Trump’s U-turn.

Yet despite the temporary pause, multiple flashpoints remain. The 10 per cent tariff still represents a new tax on global exports to the US, and steep duties on key products such as steel, aluminium, and vehicles – including those from the UK – remain firmly in place. Car parts are set to be added to the list next month.

President Trump also doubled down on his hardline stance towards China, announcing an immediate hike in tariffs on Chinese goods to 125 per cent. In response, Beijing vowed to impose 84 per cent tariffs on American exports starting Thursday, calling the US move “a mistake on top of a mistake”.

The European Union, meanwhile, confirmed plans to introduce retaliatory tariffs of up to 25 per cent on $23 billion worth of US goods starting next week, with a second phase targeting US car exports and broader duties expected in the coming days.

Mr Trump claimed that over 75 countries had contacted Washington in hopes of negotiating a deal following his announcement of across-the-board tariffs, and said the decision to pause was aimed at countries that “don’t need to be hurt”.

However, mixed messages from the White House have caused confusion, with Mr Trump’s own trade representative, Jamieson Greer, blindsided during a congressional hearing where the pause was announced. “It looks like your boss just pulled the rug out from under you,” Congressman Steven Horsford told him. “This is amateur hour, and it needs to stop.”

Critics say the President’s approach is fuelling economic volatility at a time when recession risks are rising. JPMorgan Chase CEO Jamie Dimon warned that a downturn is a “likely outcome” of the current uncertainty. Delta Airlines withdrew its annual guidance, citing fading consumer confidence, while Walmart cautioned that profits would become harder to forecast due to the changing trade environment.

UK Prime Minister Keir Starmer, speaking to ITV, acknowledged the gravity of the situation. Asked whether the tariffs could be negotiated down, he admitted: “Look, I don’t know. We are negotiating and we hope to improve the situation.”

The European Commission was blunt in its assessment, stating that the US tariffs are “unjustified and damaging” to both the US and global economies. The bloc left the door open to pausing its own countermeasures should a fair deal be reached.

For now, the markets have stabilised – but analysts warn the pause could prove fleeting. With major tariffs still in force, and threats of new levies on pharmaceuticals and other imports looming, the business community remains braced for further turbulence.

In brief:

• Mr Trump paused tariffs above 10 per cent for most countries for 90 days.
• China faces immediate 125 per cent US tariff and pledges 84 per cent retaliation.
• Stock markets surged, but recession fears linger.
• UK and EU still facing 25 per cent US tariffs on key exports.
• EU retaliatory tariffs to begin next week.
• Business leaders warn of lasting uncertainty and economic disruption.

As one observer put it: Don’t pop the champagne just yet.