In a dramatic policy reversal, U.S. President Donald Trump announced on April 9, 2025, a 90-day suspension of newly imposed tariffs on numerous countries, while significantly increasing tariffs on Chinese imports. This unexpected move led to a historic surge in U.S. stock markets, with the S&P 500 experiencing its largest single-day gain since 2008.
The initial tariffs, which took effect less than 24 hours prior, had sparked significant financial market volatility, erasing trillions from global stock valuations and causing a sharp rise in U.S. government bond yields.
In response to the market upheaval, President Trump stated,
“I saw last night that people were getting a little queasy. The bond market right now is beautiful.”
Under the revised tariff strategy, a universal 10% tariff remains on most imports, but country-specific tariffs are suspended for three months to allow for negotiations. Conversely, tariffs on Chinese imports have been raised to 125%, escalating the ongoing trade tensions between the world’s two largest economies.
The market responded positively to the tariff suspension. The S&P 500 closed up 9.5%, marking its best day since 2008, while the Nasdaq Composite surged 12.2%, its second-largest rise on record. The Dow Jones Industrial Average also saw a significant increase of 7.8%. This rebound added approximately $4 trillion to the S&P 500’s market capitalisation.
Treasury Secretary Scott Bessent defended the administration’s approach, stating that the abrupt policy shift was part of a deliberate strategy to maximise negotiating leverage. He emphasised that the move rewarded countries that refrained from retaliatory measures and positioned the U.S. favourably in future trade discussions.
Despite the market rally, analysts caution that the economic damage and uncertainty from the initial tariffs may have lasting effects. Surveys indicate a slowdown in business investment and consumer spending due to tariff concerns, and inflationary pressures remain a significant worry. Goldman Sachs adjusted its recession probability down to 45% following the tariff pause but noted that the overall tariff rate is still elevated.
Australia, a longstanding ally of the United States, was among the countries initially subjected to the baseline 10% tariff on imports. Despite the temporary suspension of country-specific tariffs, Australia’s situation remains unchanged, with the 10% levy still in effect.
Earlier, Prime Minister Anthony Albanese criticised the U.S. decision, stating it was “not the act of a friend,” but ruled out reciprocal tariffs to avoid escalating trade tensions. Since the Australian government has expressed its intent to negotiate with U.S. officials to seek exemptions and mitigate the impact on key export sectors, including beef and pharmaceuticals.
Treasurer Jim Chalmers has been tasked with leading these discussions, emphasising the importance of maintaining strong economic ties between the two nations
The intensified tariffs on Chinese goods have further strained U.S.-China relations. China has previously retaliated with its tariffs, and the latest U.S. actions are expected to prompt additional countermeasures. The administration has indicated that negotiations with China will be prioritised after discussions with other countries.
While the temporary suspension of tariffs has provided short-term relief to financial markets, the long-term implications of the administration’s trade policies remain uncertain. Businesses and consumers alike are advised to stay vigilant as the situation continues to evolve.
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