TLDR
- Trump pauses global tariff hikes except for China, where duties increased to 125%
- Markets rebounded strongly with S&P 500 up 9.5% and Bitcoin reaching nearly $82,000
- XRP and Ether led crypto gains with 12% surge; overall crypto market cap rose 6%
- China vows to “fight to the end” in escalating trade war with the U.S.
- U.S. Treasury Secretary Bessent claims 90-day tariff freeze was planned to bring countries to negotiation table
U.S. President Donald Trump made a sudden reversal on Wednesday, pausing most of the hefty tariffs he had imposed just 24 hours earlier on dozens of countries. The decision brought immediate relief to global markets but intensified the trade war with China, where tariffs were increased to 125%.
The abrupt policy change came after markets experienced their most intense volatility since the early days of the COVID-19 pandemic. The market turmoil had erased trillions of dollars from global stocks and put pressure on U.S. Treasury bonds.
“I thought that people were jumping a little bit out of line, they were getting yippy, you know,” Trump told reporters, referring to market jitters.
His comments suggested the market reaction influenced his decision despite earlier insistence that his policies would never change.
U.S. stock indexes responded positively to the news. The S&P 500 closed 9.5% higher in its best rally since 2008, rebounding from bear-market territory. The tech-heavy Nasdaq 100 surged 12%.
Crypto Markets Surge
Cryptocurrencies also experienced strong gains following Trump’s announcement. Bitcoin rose to nearly $82,000 early Thursday, leading a broad market recovery.
XRP and Ether led gains among major cryptocurrencies with a 12% surge. Cardano’s ADA, BNB Chain’s BNB, Solana’s SOL, and Dogecoin all increased by about 10%.
The overall cryptocurrency market capitalization rose 6%. Crypto-tracked futures showed short liquidations of over $350 million, the highest since early March.
Among midcap tokens, Bittensor’s TAO, Sonic’s S, and Flare’s FLARE posted gains of up to 30%.
China Trade War Escalates
Despite the global tariff pause, Trump kept pressure on China by hiking tariffs on Chinese imports to 125% from the 104% level that had taken effect on Wednesday.
Beijing may respond in kind after already implementing 84% tariffs on U.S. imports earlier in the week. China has repeatedly vowed to “fight to the end” in the escalating trade war between the world’s top two economies.
“We don’t back down,” China’s foreign ministry spokesperson Mao Ning posted on social media, sharing a video of a defiant speech by late Chinese leader Mao Zedong from 1953.
The heightened trade tensions are already affecting business decisions. Chinese sellers on Amazon are preparing to raise prices for U.S. customers or exit the market entirely due to the tariff increases.
Goldman Sachs revised down its forecast for China’s GDP growth to 4% in 2025, from previous projections of 4.5%, citing the negative effects of tariffs.
Trump indicated that resolution with China on trade remains possible but said U.S. officials will prioritize talks with other countries as Vietnam, Japan, South Korea and others line up to negotiate.
The 90-day freeze does not apply to duties paid by Canada and Mexico related to fentanyl provisions of the U.S.-Mexico-Canada trade agreement. A 10% blanket duty on almost all U.S. imports will also remain in effect.
U.S. Treasury Secretary Scott Bessent claimed the tariff pause had been planned all along to bring countries to the negotiation table. “This was his strategy all along,” Bessent told reporters. “And you might even say that he goaded China into a bad position.”
Since Trump’s tariff announcements last week, S&P 500 companies had lost almost $6 trillion in stock market value, a record four-day decline for the benchmark going back to the 1950s.
Market analysts remain cautious despite the rally. “The market is rallying in response to anticipation that most trading partners will negotiate trade deals with the US, avoiding a full-fledged trade war,” Jeff Mei, COO at BTSE, told CoinDesk.
Jupiter Zheng, partner at HashKey Capital, suggested markets may have reached a local bottom. “The upswing was fueled by optimism that the worst may be behind us. While potential headwinds remain, such as retaliatory tariffs from China, the start of negotiations with other countries offers some hope,” he said.
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