US shares have rocketed after US President Donald Trump said he would suspend higher tariffs on goods from most countries, and instead impose a 10% import tax rate.
The White House said it was backing off on steeper 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 7% in afternoon trading and was on course for one of its best days in years, after days of market turmoil amid dire warnings of an economic recession sparked by the trade war.
Trump’s decision comes less than 24 hours after tariffs he announced earlier this month came into force, hitting goods from key trade partners, such as Vietnam, which saw its imports facing a new levy at the border of 46%.
In mid-afternoon trading, the Dow also climbed more than 6.7% and the Nasdaq surged more than 10%.
“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 was likely to take longer 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.”
