Global markets soar after President Trump's tariff pause

A trader sits in front of computer screens on the trading floor of the Frankfurt Stock Exchange beside a TV showing U.S. President Donald Trump on a news channel in Frankfurt, Germany, on Thursday, the day after Trump announced a 90-day pause on tariffs. Martin Meissner/AP hide caption

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Martin Meissner/AP

European and Asian stock markets both soared on Thursday in line with Wall Street's Wednesday gains, following President Donald Trump's unexpected announcement of a pause on his higher global tariffs.

The FTSE 100 in London jumped significantly at the start of the trading day, along with its peers in Frankfurt and Paris, both trading more than 5% higher by mid-morning local time.

Japan's Nikkei had closed up 9.1%, while South Korea's Kospi ended the day 6.6% higher, taking the Seoul index out of bear territory.

In Taiwan, stocks spiked 9.25% Thursday, staging a strong comeback after the island's composite index logged its biggest one-day drop on record earlier this week.

Hong Kong's Hang Seng Index had also gained 2% by the close of trading, while key indices in China rose only slightly, weighed down by the fact that tariffs imposed on Chinese goods alone are now slated to increase rather than fall.

Investors are still looking to Beijing for fresh retaliatory reaction after President Trump not only excluded China from his pause on tariffs, but hiked them further on Chinese exports to 125%. That increase came hours after Beijing announced Wednesday there would be retaliatory duties of 84% on American goods imported to China.

Global market relief — at least temporarily

Trump's steep tariffs had been in effect for only about 12 hours on Wednesday when he said he would suspend them for the next 90 days. The announcement was made during Wall Street trading hours, and sent U.S. stocks surging.

The U.S. president posted on Truth Social early Thursday "What a day, but more great days coming!!!"

Prior to that U-turn, the policies had caused significant upheaval and wiped trillions of dollars of value from global stock markets. The actions of the White House had also seen U.S. government bond yields soar – concerning investors and economists alike.

"I thought that people were jumping a little bit out of line, they were getting yippy, you know," Trump said during public remarks in the Oval Office, using a word for jitteriness that is more typically applied to golfers.

European reactions and retaliations

In Europe, leaders reacted with relief but some frustration to the decision to reduce tariffs on most EU exports to just 10% for the next 90 days, while higher tariffs of 25% will continue to apply to steel, aluminum and cars. "Clear, predictable conditions are essential for trade and supply chains to function," said Ursula von der Leyen, president of the European Commission, which coordinates the EU's trade policies.

On Wednesday afternoon, the Commission had announced tariffs on certain U.S. exports would start to take effect this month, in response to those earlier 25% tariffs on metals, with further "countermeasures" to be rolled out in May and then December.

But Thursday on social media, von der Leyen wrote that the EU wanted to "give negotiations a chance" in light of Trump's 90-day suspension, and the Commission would pause the implementation of its own retaliatory tariffs for the same 90-day period.

She warned the EU would continue to identify other, future retaliatory actions, and added that "if negotiations are not satisfactory, our countermeasures will kick in. "Investors in Europe on Wednesday began to reduce their bets on the possibility of rate cuts by the European Central Bank, which would have been one potential response to the risk of a recession caused by the tariffs. But a French member of the European Central Bank, François Villeroy de Galhau, told French radio that President Trump's about-face suspension of high tariffs was merely "less bad news" than before, "but there remain two bad ingredients: unpredictability, which is always the enemy of confidence and growth; and protectionism."

In the U.S., the CBOE Volatility Index, a measure of stock rises and falls that is commonly known on Wall Street as the "fear gauge," had earlier this week hit its highest level at the close of the day's trading since the height of the coronavirus pandemic in 2020.

Meanwhile the yields on government bonds in the Eurozone rose, suggesting that investors were no longer seeking to park so much of their funds in financial assets that seemed more secure than stocks, as capital flows returned to the volatile equity markets.

China continues to face severe U.S. trading costs

Analysts appear to disagree on whether Trump's higher tariffs on China will have a limited impact on the country's economy. But Goldman Sachs updated its economic forecasts for China's GDP growth in 2025 because of the negative impacts tariffs will have, lowering them from 4.5% to 4%.

Either way, many investors say they would rather see an end to this explosive trade war between the world's two largest economies.

But China's foreign ministry spokesman Lin Jian said on Thursday that China is prepared to continue fighting.

"Let me stress that tariff wars and trade wars have no winners. China does not want to fight them, but will not fear when they come our way," Lin said at a regularly scheduled press conference.

"We don't back down," wrote Mao Ning, another foreign ministry spokesperson, on social media, while posting a video of China's former leader Mao Zedong delivering a defiant tirade against the United States back in 1953, during the conflict on the Korean Peninsula – which ended not in a long-term, negotiated peace deal, but instead a military stalemate and still, officially, an ongoing armistice.

Trump's optimism on deal with Xi

Speaking from the Oval Office on Wednesday, Trump had repeated his previous assertion that China would eventually negotiate with the U.S.

"President Xi's a very smart guy and I think we'll end up making a very good deal," he said.

The president added he didn't think the U.S. would need to further increase tariffs to bring Beijing to the bargaining table.

"I can't imagine it," he said.

China has signaled it will ultimately be willing to negotiate, but only if the U.S. administration changes its attitude.

"If the U.S. really wants to talk, it should show an attitude of equality, respect and mutual benefit," Lin, the foreign ministry spokesman, said Thursday.

Asian countries welcome more time to strike deals with the U.S. 

Meanwhile, other Asian economies breathed a sigh of relief and welcomed more time to negotiate trade deals and avoid steeper tariffs. Nonetheless, a baseline tariff of 10% will remain in place for all countries during the 90-day suspension of higher tariffs that particularly targeted Asian manufacturing hubs, like Vietnam and Cambodia.

New Delhi wants to move rapidly towards its own updated trade agreement with the Trump administration, which the two sides had agreed earlier this year would take years to finalize.

But Indian authorities have said meanwhile they will start to scrutinize imports more carefully, to ensure low-cost Chinese goods are not dumped in India during the continued spat between the world's two largest economies. India's trade minister seemed to echo President Trump's own concerns earlier this week when he said that Indian manufacturers had struggled to compete with their Chinese counterparts thanks to unfair trading practices.

Ashish Valentine contributed to this report.