Trump Tariffs Paused For 90 Days: Impact On Dow, Nasdaq, And China Trade

Survey Note: Detailed Analysis of Trump's Tariff Pause and Its Implications

On April 9, 2025, President Donald Trump made a surprising announcement via a social media post, declaring a 90-day pause on tariffs for most countries, reducing them to a universal 10% rate, while simultaneously escalating tariffs on China to 125%. This move came just hours after implementing steep reciprocal tariffs on nearly 60 countries, which had plunged global markets into chaos. This survey note provides a comprehensive analysis of the reasons behind the pause, its immediate impacts, and the broader implications, drawing on multiple reliable sources including CNBC, CNN, and The New York Times.

Context and Background

The tariff saga began with Trump's "Make America Wealthy Again" trade policy announced on April 2, 2025, imposing reciprocal tariffs matching foreign rates, with some reaching 46%. This was part of his broader agenda to address perceived unfair trade practices, particularly targeting countries like China for their trade imbalances. The initial imposition led to immediate retaliation from several nations, with China escalating tariffs on U.S. goods to 84% and imposing export controls on American companies, as reported by The New York Times. The European Union and others threatened countermeasures, creating a volatile global trade environment.

Financial markets reacted sharply, with the S&P 500 dropping 17% since mid-February, resulting in an estimated $104,000 loss per average retirement account, according to CNBC. This market turmoil, coupled with fears of recession, set the stage for Trump's sudden policy shift.

Reasons for the Tariff Pause

The decision to pause tariffs for 90 days appears driven by multiple factors, as gleaned from various sources:

• Market Pressure: Trump himself acknowledged the market's downturn, stating in an interview with The New York Times that "Over the last few days it looked pretty glum," and noted people were "getting yippy" and "a little bit afraid." He also mentioned watching the bond market, which he described as "beautiful" post-announcement, suggesting market stability was a key concern.
• Strategic Negotiation: Treasury Secretary Scott Bessent, as cited by CNBC, framed the pause as part of a planned strategy, stating it was always intended to goad countries like China into a weaker position while rewarding those that did not retaliate. Bessent emphasized, "Do not retaliate and you will be rewarded," aiming to encourage negotiations.
• Personal Involvement in Talks: Trump plans to be personally involved in what he described as "separate, bespoke negotiations" with each country, as noted by CNN. This hands-on approach is seen as a way to maximize leverage, with Bessent adding that "no one creates leverage like Trump."

The pause applies to over 75 countries that reached out to negotiate, lowering their tariff rate to 10%, while China was excluded due to its retaliatory actions, with tariffs raised to 125%, as reported by Bloomberg.

Immediate Market Reaction

The financial markets responded euphorically to the tariff pause, marking one of the most significant rallies in recent history:

• Dow Jones Industrial Average: Up 7.87% (nearly 3,000 points), marking its best day in 5 years.
• S&P 500: Up 9.5%, its best performance since the 2008 recovery.
• Nasdaq Composite: Up 12.2%, the second-best day on record.
• Retail Stocks: Significant gains with Wayfair up 19.67% and Levi Strauss up 18.18%.
• Energy (U.S. Crude Oil): Up 4.65%, reaching $62.35 per barrel.
• Technology: Tesla surged 20%, and Nvidia rose 15%.

This data, sourced from CNBC and CNN, reflects broad-based gains across sectors, with tech and retail leading the charge. However, the rally came after significant losses, with trillions in stock market value vanishing in the days prior, as noted by The New York Times.

Political and International Reactions

Reactions to the tariff pause were diverse and often polarized:

• Domestic Political Response: Democrats were critical, with Rep. Steven Horsford (D-Nevada) shouting "This is amateur hour" during a House hearing, as reported by CNBC. Sen. Chuck Schumer, also cited by CNBC, claimed tariffs "vaporized" retirement accounts, calling for their repeal. Gov. Gretchen Whitmer (MI) described it as a "triple whammy" of higher costs, fewer jobs, and uncertainty, per an X post.
• Business Leaders: Jamie Dimon, CEO of JPMorgan, warned of a likely recession due to tariff turmoil, as per CNBC. Delta Air Lines CEO Ed Bastian called tariffs the "wrong approach," noting potential impacts on bookings, as cited by CNBC.
• International Reactions: Countries not retaliating, like Vietnam, offered deals such as cutting tariffs on U.S. apples and cherries, as per The New York Times. Europe, South Korea, and others sought negotiations, while China remained defiant, with its State Council Tariff Commission criticizing the U.S. move as "a mistake upon mistake," per CNN. Commerce Secretary Howard Lutnick confirmed on an X post being with Trump during the announcement, stating the world is ready to work with Trump, except China.

Economists like Joe Brusuelas of RSM US, cited by CNN, warned the pause is unlikely to prevent recession, with Goldman Sachs adjusting its probability to 45% over the next 12 months, down from a previous "base case," as reported by CNN.

Implications and Future Outlook

The 90-day pause offers a temporary reprieve but leaves significant uncertainty:

• Negotiation Prospects: Trump aims for "bespoke negotiations," potentially leading to tailored trade deals. Countries like Mexico and Canada have already engaged, with Mexican President Claudia Sheinbaum thanking Trump for the pause, as per CNBC.
• China's Stance: China's vow to "fight to the end," as noted by Wendong Zhang of Cornell University in CNN, suggests risks of further escalation. Since the 2018-19 trade war, China has reduced reliance on U.S. products, pivoting to domestic consumption, backed by public support.
• Economic Risks: The pause may not stave off recession, with simultaneous shocks like inflation and supply chain disruptions cited by economists. Retailers and tech firms, heavily reliant on Chinese manufacturing, face ongoing uncertainty, as per Bloomberg.

Conclusion

Trump's tariff pause on April 9, 2025, has provided a momentary calm in global markets, halting a downward spiral that alarmed investors. However, with China excluded and recession risks persisting, the long-term impact remains uncertain. As negotiations unfold, the world watches closely, hoping for resolution but prepared for potential escalations. This move, while offering relief, underscores the complexity of global trade dynamics and Trump's strategic approach to leveraging market reactions for negotiation leverage.