US shares have rocketed after US President Donald Trump said he would suspend steep tariffs on goods from most countries, and instead impose a 10% import tax rate.
The White House said it was backing off on higher levies for trade partners that had agreed to negotiate, although Trump said he would raise tariffs on goods from China even further, to at least 125% “effective immediately”.
The S&P 500 soared 9.5% in the biggest one-day rally since 2008, following days of turmoil sparked by the tariffs.
Trump’s decision came less than 24 hours after the latest round of tariffs had come into force, hitting key trade partners, such as Vietnam, which saw its imports facing a new levy of 46%.
The duties, which the president had announced last week, were higher and more far-reaching than many on Wall Street had anticipated.
In the aftermath of the announcement, the S&P plunged more than 10% and many analysts warned of the rising risk of economic recession in the US and globally.
By Wednesday, the fears had hit the bond market, where investors started dumping US government bonds.
“Although President Donald Trump was able to resist the stock market sell-off, once the bond market began to weaken too, it was only a matter of time before he folded on his eye-wateringly high tariffs,” said Paul Ashworth, chief North America economist for Capital Economics.
He said he expected Trump to return to the plan for a 10% universal tariff that he called for in his campaign, though warned that it would take time for for the US and China to work out a deal.
“It is difficult to see either side backing down in the next few days,” he said. “But we suspect that talks will eventually happen, although a full rollback of all the additional tariffs applied since Inauguration Day appear unlikely.”
The Dow ended the day up more than 7.8% and the Nasdaq skyrocketed more than 12%.
Companies such as Nike, which makes roughly half its footwear in Vietnam, jumped 11%, while Apple soared roughly 15%.
Despite the gains, the leading indexes in the US remain lower than they were before Trump’s announcement, with the S&P 500 off about 3% and down more than 8% for the year.
