Markets Soar After Trump’s Surprise Tariff Pause

ByElena Carter

U.S. stocks staged their most dramatic rally since 2008 Wednesday after President Donald Trump unexpectedly announced a 90-day pause on his controversial global tariff plan, triggering a historic buying frenzy that saw the S&P 500 surge 9.52%. The stunning reversal came just hours after markets approached bear territory and as many economists were warning of an imminent recession.

“I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately,” Trump declared on Truth Social at 1:18 p.m. ET, according to Yahoo Finance. The announcement sparked an immediate market explosion, with the Dow Jones Industrial Average catapulting nearly 3,000 points, its largest single-day point gain in history.

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Historic Trading Volume

Approximately 30 billion shares changed hands during the session, making it the heaviest volume day on Wall Street in recorded history, according to data from CNBC. The tech-heavy Nasdaq Composite jumped a staggering 12.16%, marking its second-best day ever and largest gain since January 2001, while the S&P 500’s 9.52% surge ranked as its third-largest gain since World War II.

When asked about the abrupt policy shift later in the day, Trump acknowledged market concerns had influenced his decision. “I thought that people were jumping a little bit out of line. They were getting yippy, you know, they were getting a little bit yippy, a little bit afraid,” he told reporters, seemingly relishing the market response by calling it “the biggest day in financial history.”

Selective Relief

Treasury Secretary Scott Bessent later clarified that all countries except China would return to the 10% baseline tariff rate, down from the higher country-specific rates that had shocked global markets. However, in a move that maintained pressure on Beijing, Trump simultaneously increased China’s tariff rate to 125%, up from the 104% level implemented earlier this week.

“Each one of these is going to be separate, bespoke negotiation,” Bessent told reporters, noting that the president would be personally involved in discussions with trading partners. He emphasized that sector-specific tariffs would remain in place and that the pause applied only to the recently announced reciprocal tariffs.

Market Leaders

Technology companies, which had been among the hardest hit during the recent selloff, led Wednesday’s rally. Nvidia soared more than 18%, while Tesla shares rocketed up nearly 23%. Apple and Meta each jumped approximately 15%, as investors who had feared severe supply chain disruptions breathed a collective sigh of relief.

“While uncertainty isn’t headed to zero, the worst-case scenario is off the table most likely,” wrote Michael Kantrowitz, chief investment strategist at Piper Sandler, in a note to clients. However, many analysts cautioned that the underlying trade tensions remain unresolved. “Tariffs are not going away. China’s tariff rate is now in triple digit territory, and who knows what happens in 90 days when this pause concludes,” noted Adam Crisafulli, founder of Vital Knowledge.

Bond Market Skepticism

Despite the stock market euphoria, bond markets displayed continued skepticism, with the 10-year Treasury yield climbing 14 basis points to 4.40%, extending its dramatic three-day rise – the largest since 2001. This persistent bond selloff suggests fixed-income investors remain concerned about inflation risks and potential long-term economic damage from trade policies.

“The bond market is very tricky. I was watching it. But if you look at it now, it’s beautiful,” Trump claimed Wednesday. However, economists noted that the continued elevation in yields could complicate the administration’s goal of reducing government borrowing costs.

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Economic Outlook Shifts

The tariff pause prompted immediate revisions to economic forecasts. Goldman Sachs economists, who had published a note moving to a “recession baseline” just before Trump’s announcement, quickly reversed course. “We are reverting to our previous non-recession baseline forecast with GDP growth of 0.5% and a 45% probability of recession,” wrote Jan Hatzius, the bank’s chief economist.

As markets digest the implications of what economist Justin Wolfers called Trump’s economic “blink,” attention turns to whether the 90-day window will provide sufficient time to negotiate meaningful trade agreements or merely postpone an inevitable confrontation. With China already announcing 84% retaliatory tariffs and European countermeasures still pending, the global trade landscape remains fraught with uncertainty despite Wednesday’s remarkable market recovery.

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Elena Carter

Elena is a seasoned political analyst who dissects elections, policies, and power plays with precision. Her expertise lies in breaking down legislation, campaign strategies, and the impact of political shifts on global markets.

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