Trump's 90-day pause on reciprocal tariffs: Nasdaq skyrockets 12%, China shares rally despite 125% tariff; 10 things to know

In a post on Truth Social, the president said he had authorised “a 90-day PAUSE” in which countries would face “a substantially lowered reciprocal tariff” of 10%. As a result, nearly every US trading partner now faces a 10% blanket tariff on top of the 25% tariffs that Trump has imposed on cars, steel and aluminium.

Trump said “more than 75 countries” contacted US officials to negotiate after he unveiled his new tariffs last week.

However, Trump said he was raising the tariffs imposed on imports from China to 125% “effective immediately” due to the “lack of respect that China has shown to the world’s markets”.

China, the US’s third-largest trading partner, earlier Wednesday said it would increase its tariff rate on imports from the US to 84%.

Reacting to the temporary relief, the stock market rallied like there was no tomorrow. The US headline indices soared to one of their best days in history.

"Wednesday's rally pulled the S&P 500 index away from the edge of a 'bear market. That's what professionals call it when a run-of-the-mill drop of 10% for US stocks, which happens every year or so, graduates into a more vicious fall of 20%. The index is now down 11.2% from its record," said a report by AP.

10% base tariffs

US President Donald Trump has announced new tariff rates on imports from most US trade partners of 10% for 90 days to allow trade negotiations with those countries.

After insisting for days that he would hold firm on his aggressive trade strategy, Trump announced that all countries that had not retaliated against US tariffs would receive a reprieve – and only face a blanket US tariff of 10% – until July.

25% auto tariffs stay

The 25% tariffs on cars and auto parts, which went into effect on April 2, are still in effect. The US is not halting 25% tariffs on automotive imports and looming tariffs on auto parts, drawing criticism from Michigan business and auto groups. The Detroit Regional Chamber and MichiganAuto called on Trump to protect the automotive industry's complex international supply chain framework from harmful fragmentation that weakens its global competitiveness, Reuters reported.

25% tariff on steel and aluminium intact

The 25% tariffs on steel and aluminium, which went into effect on March 12, are still in effect.

China punished with 125% tariff

Trump heaped pressure on China, saying he would raise the tariff on Chinese imports to 125% from the 104% level that came into effect on Wednesday. China, on Wednesday, raised additional duties on American products to 84% and imposed restrictions on 18 US companies, mostly in defence-related industries.

"It is difficult to see either side backing down in the next few days. But we suspect that talks will eventually happen, although a full rollback of all the additional tariffs applied since Inauguration Day appears unlikely," Reuters reported, quoting Paul Ashworth, chief North America economist at Capital Economics, as saying.

Wall Street makes history

Following the temporary relief, US equity benchmark indices posted their biggest one-day gains in years, with the S&P 500 recording its largest rise since 2008, while the dollar gained and Treasuries pared losses on Wednesday.

The market participants rejoiced at the move, as the imposition of reciprocal tariffs with the rate announced triggered fears of a global economic slowdown and recession in the US.

At close, the Dow Jones Industrial Average stood at 40,608.45, up 2,962.86 points, or 7.87%, while the S&P 500 rose 474.13 points, or 9.52%, to 5,456.90. The tech-heavy index, Nasdaq Composite, zoomed 1,857.06 points, or 12.16%, to 17,124.97.

The rally pushed Wall Street's "Magnificent Seven" stocks surging again and tacking on more than $1.5 trillion in market value overnight.

US Treasuries and dollar index

The yield on benchmark US 10-year government bonds rose 6.8 basis points to 4.328%. It earlier reached 4.515%, the highest since February 20. Bond yields move in the opposite direction of prices.

A sharp selloff in Treasury prices this week and reports of large liquidations of bonds had raised concerns about deteriorating market liquidity.

The dollar was lower before Trump's announcement.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.25% to 103.03, with the euro down 0.08% at $1.0947, on Wednesday.

In the early trade on Thursday, the dollar logged its largest one-day jump against the yen in two months and in five against the Swiss franc in the previous session and held on to most of those gains in Asia.

Asian markets follow Wall Street

Asia-Pacific markets rose on Thursday, following Wall Street’s stellar rally after US President Donald Trump announced a 90-day pause on higher tariffs on all nations bar China.

Japanese markets led gains in the region. The benchmark Nikkei 225 rose 8.19%, while the broader Topix index advanced 7.44%.

South Korea’s Kospi index surged 5.36%, while the small-cap Kosdaq gained 5.32%.

Australia’s S&P/ASX 200 rose 4.69%.

European futures shot up, too, in the early trade. EUROSTOXX 50 futures and DAX futures climbed roughly 9% each. FTSE futures jumped 6%. However, US futures turned lower on Thursday, with Nasdaq futures falling 0.67% and S&P 500 futures down 0.17%.

China stocks jump

Despite the 125% tariff by the US, Chinese equity markets opened on a strong note on Thursday. The CSI300 blue-chip index was trading 1.6% higher, while Hong Kong's Hang Seng Index jumped 3.3%.

GIFT NIFTY Futures

The domestic stock market is shut today on account of Mahavir Jayanti.

Oil Prices

Crude oil prices slipped around 1% on the escalating trade war between the world's two biggest economies – China and the US.

Brent futures fell 73 cents, 1.1%, to $64.73 a barrel by 01:08 a.m. GMT, while U.S. West Texas Intermediate crude futures lost 49 cents, or 0.8%, to $61.86.

On Wednesday, the benchmarks had settled 4% higher after dropping as much as 7% during the session.

Gold shines

Gold prices climbed more than 2% on Wednesday and were poised for their best day since October 2023, supported by safe-haven inflows amid escalating US- China trade tensions as US President Donald Trump further increased tariffs on China.

"Ultimately, gold continues to be seen as a hedge against instability here. We've got a situation where tariffs are becoming a big problem, and you have inflationary expectations going higher, and that's manifested by higher yields," Reuters reported, quoting Bart Melek, head of commodity strategies at TD Securities, as saying.