Trump's 90-Day Tariff Pause Boosts US Stocks 7.87%

President Donald Trump announced a significant shift in his tariff policies, implementing a 90-day pause on expanded tariffs for dozens of countries, excluding China. This decision came after a meeting with economic aides and marked a temporary easing of trade tensions. Concurrently, Trump raised the tariff rate on China to 125%, effective immediately. This move was part of a broader strategy to address trade imbalances and protect domestic industries.

The announcement had an immediate and profound impact on financial markets. The US stock market experienced a strong rebound, with major indices posting substantial gains. The Dow rose by 7.87%, marking the largest single-day gain since March 25, 2020; the S&P 500 soared by 9.52%, delivering its best single-day performance since 2008; the Nasdaq surged over 12%, recording the second-largest single-day gain in history. Tech stocks performed well, with the Big Seven Index rising by 14.00%, and the total market cap increasing by $1.85 trillion in a single day.

The crypto market also saw a surge in prices, with major cryptocurrencies like Bitcoin and Ethereum rallying higher. Bitcoin continued its climb from the previous day's low of $74,000, reaching around $83,000 before the deadline, up over 8.7% in the past 24 hours. Ethereum rebounded from a low of $1,385, trading around $1,660 before the deadline, with a nearly 14.6% increase in the past 24 hours. Other altcoins also experienced significant gains, with the total crypto market cap rising by 8.4% in 24 hours. However, the market sentiment has not significantly recovered, indicating a strong sense of uncertainty regarding the recent tariff war.

In the forex and commodities market, the trade dispute continues, with the US dollar index falling by 0.10% after a failed rebound; crude oil staged a strong rebound, with intraday gains exceeding 5%; spot gold fluctuated higher throughout the day, rising by 3.27% in the New York session.

The pause on tariffs was particularly beneficial for sectors with significant exposure to international trade. Retail stocks, for example, saw a significant rebound, as the temporary relief from tariffs on countries provided a much-needed boost. Airlines also performed well, with major carriers experiencing substantial gains. This was despite some airlines withdrawing their guidance, highlighting the market's focus on the immediate benefits of the tariff pause.

The decision to raise tariffs on China to 125% was a clear signal of the administration's intent to address trade imbalances with China. This move was part of a broader strategy to protect domestic industries and ensure fair trade practices. The immediate impact of this decision was a sharp increase in tariffs on Chinese goods, which could have significant implications for US-China trade relations in the coming months.

Overall, the announcement of the 90-day tariff pause and the increase in tariffs on China had a significant impact on financial markets. The US stock market and crypto market both experienced strong rebounds, driven by a combination of relief from the tariff pause and optimism about the potential for further trade negotiations. The decision to raise tariffs on China was a clear signal of the administration's intent to address trade imbalances and protect domestic industries. The coming months will be crucial in determining the long-term impact of these policies on the global economy.