Analysts will be watching the stock market today after Wednesday’s major rebound following President Trump’s announcement of a pause on reciprocal tariffs.
The Dow Jones Industrial Average jumped nearly 3,000 points after the news. The S&P climbed 9.5%, and the Nasdaq Composite jumped 12.2%.
The president’s action came just 13 hours after the tariffs went into effect.
The pause affects most nations except China, with the administration hiking their tariffs to 125% after China’s retaliatory increase on U.S. goods of 84%.
“I told them, ‘If you retaliate, we’re going to double it.’ And that’s what I did with China because they did retaliate,” Trump said Wednesday afternoon.
Shortly after the announcement, the president said the market reaction played a role in this decision. “Well, 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,” said Trump.
Later in the day, President Trump said the administration had been considering a pause for days, even though he denied it earlier in the week.
“For a period of time, I wouldn’t say this morning. Over the last few days, I’ve been thinking about it,” the president said a few days ago.
News outlets are reporting that the president responded to concerns by business leaders and lawmakers concerned about the impact on the global economy.
The uncertainty has caused chaos in the market for days, with the Dow losing more than 4,600 points and the S&P 500 sustaining a 12% fall. The Nasdaq Composite was down more than 13%.
A likely major factor in the policy change is a sell-off in American bonds by foreign nations.
Trump explained his shift, saying, “You have to have flexibility.”
With the pause and the positive market response, Richard Stern of the Heritage Foundation told CBN’s Faith Nation the president’s tariff strategy is working.
“The markets don’t like uncertainty,” said Stern. “What we saw was a decline based on people not having a knowledge of what the strategy actually was or where it was gonna go, whether it be successful or not. So, I think the fact that we’ve seen success, the fact that this has come so incredibly quickly of course means you’re not gonna have the stock market harms turn into real harms in the rest of the real economy.”
The president also believes the strategy worked because at least 75 nations are seeking to renegotiate their trade agreements.
News of the pause led investment bank Goldman Sachs to withdraw its prediction of a recession.
Meanwhile, the pause does not affect all tariffs. The baseline 10% tariff on all imports remains, as well as tariffs on Mexico, Canada, and foreign cars.
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