Markets are rebounding after Donald Trump froze worldwide tariffs at 10% for 90 days – except on China, which now faces a 125% levy. Beijing’s retaliatory measures are in effect from today. Listen to the Trump 100 podcast – on the trade war between the two countries – as you scroll.
Thursday 10 April 2025 07:15, UK
Live reporting by Bhvishya Patel
Stock markets have rallied after Donald Trump reversed most of his tariffs for 90 days.
The US president’s top- level import taxes have been paused – instead a default 10% tariffs will apply to almost all countries.
China is the only exception, with Trump imposing a huge 125% tariffs after China retaliated to his trade war with an 84% tariff of its own.
Trump has indicated that the 90 days will be used to strike deals and claims around 75 countries have asked the White House for talks.
After a week of tanking, US stocks made up much of the ground after Trump’s reversal last night – and Asian stocks are also up this morning.
For the UK, little has changed – it already had the lower 10% base tariff.
The background to all this is the White House believing the US has been on the wrong end of tariffs for decades. Trump hopes his policy will encourage companies to manufacture inside the US and thus “make America wealthy again”. Some have suggested his shock imposition of tariffs could also be a negotiating tactic to secure favourable trading terms.
A week after his “liberation day” tariff announcement sent markets reeling, Donald Trump changed course suddenly last night.
He froze most tariffs at 10% in a surprise post on Truth Social and then told reporters at the White House he would be “flexible”.
Investors rejoiced after bracing for a global economic meltdown.
Here’s how the president summed up the day – at 12.45am Washington time…
The trade war between the world’s two biggest economies enters a new day.
Trump’s tariff pause last night excluded China, and Beijing’s retaliatory measures came into effect this morning.
The countries’ tit-for-tat moves have kept traders on the edge of their seats and it’s unclear what will happen next.
Here is what the countries face now…
China
Trump raised tariffs to 125% “with immediate effect” yesterday.
The US
Beijing responded to Trump’s initial tariffs with a duty of 84% on US goods – effective from 12.01am today.
The rest of the world faces a baseline 10% tariff after Trump rolled back his higher levies on around 60 of the “worst offender” countries.
Asian markets have rebounded this morning after Donald Trump’s tariff reversal.
Japan’s Nikkei index, which had dropped as much as 13.81% after Trump announced sweeping import duties on 2 April, has rebounded by around 8.5%.
In Hong Kong, stocks surged while Shanghai also advanced.
The Hang Seng Index climbed 2.69%, or 545.94 points, to 20,810.43, while the Shanghai Composite Index has jumped 1.29%, or 41.03 points, to 3,227.84
And Australia’s S&P/ASX 200 soared 5.1% to 7,748.00.
Singapore’s FTSE Straits Times index surged as much as 9%.
Welcome back to our live coverage of Donald Trump’s tariffs.
The US president made the decision yesterday to pause the hefty duties he had imposed on dozens of countries for 90 days – sending global stock markets rallying after days of turmoil.
The turnaround came less than 24 hours after he had imposed the steep new tariffs on around 60 countries that he had labelled the “worst offenders” for imbalanced trade with the US.
But in the same breath he tightened the screws on China, escalating the trade war between the world’s biggest economies by hiking levies on imports to 125%, up from 104%.
Beijing hit back, announcing an 84% retaliatory tariff on US imports that went into effect today.
Before we bring you the latest today, here are the other key developments from the past 24 hours:
You can watch the moment Trump announced the tariff pause here:
We’re pausing our coverage there, following a day of significant escalations in the US-China trade stand-off.
Donald Trump announced an increase on Chinese tariffs to 125%, while announcing a 90-day pause on higher levies for dozens of other countries – see our post below for more on what this all means.
We’ll have more Asian and European reaction – both from the markets and political sphere – early in the morning.
But until then, our US correspondent James Matthews breaks down what you need to know so far in this 60-second clip…
There’s been a lot to unpack tonight.
To cut through it all, here’s what Donald Trump’s tariff pause entails:
‘Reciprocal’ tariffs on hold
China tariffs increased
No change for Canada or Mexico
Car and metal tariffs remain
Sectors at risk
Donald Trump may be heading for a crash in popularity, according to one of the world’s eminent historians.
Speaking before Trump’s tariff reversal, Sir Niall Ferguson spoke on our podcast The World with Richard Engel and Yalda Hakim.
“Higher prices plus higher unemployment will make him less popular,” he said, as he set out the path unravelling before the Republican Party.
Watch the clip below, and check out the podcast in the link at the bottom of this post.
👉Listen to The World with Richard Engel and Yalda Hakim on your podcast app👈
By Ian King, business analyst
Chalk this one up to the bond vigilantes.
This is the term used periodically to describe investors who push back against what are perceived to be irresponsible fiscal or monetary policies by selling government bonds, in the process pushing up yields, or implied borrowing costs.
Most of the focus on markets in the wake of Donald Trump’s imposition of tariffs on the rest of the world has, in the last week, been about the calamitous stock market reaction.
This was previously something that was assumed to have been taken seriously by Trump.
During his first term in the White House, the president took the strength of US equities – in particular the S&P 500 – as being a barometer of the success, or otherwise, of his administration.
He had, over the last week, brushed off the sour equity market reaction to his tariffs as being akin to “medicine” that had to be taken to rectify what he perceived as harmful trade imbalances around the world.
Trump blinks
But, as ever, it is the bond markets that have forced Trump to blink – and, make no mistake, blink is what he has done.
To begin with, following the imposition of his tariffs – which were justified by some cockamamie mathematics and a spurious equation complete with Greek characters – bond prices rose as equities sold off.
That was not unusual: big sell-offs in equities, such as those seen in 1987 and in 2008, tend to be accompanied by rallies in bonds.
However, this week has seen something altogether different, with equities continuing to crater and US government bonds following suit.
At the beginning of the week, yields on 10-year US Treasury bonds, traditionally seen as the safest of safe haven investments, were at 4%.
By early yesterday, they had risen to 4.51%, a huge jump by the standards of most investors.
This is important. The 10-year yield helps determine the interest rate on a whole clutch of financial products important to ordinary US Americans, including mortgages, car loans and credit card borrowing.
Reminiscent of Truss
By pushing up the yield on such a security, the bond investors were doing their stuff.
It is not over-egging things to say that this was something akin to what Liz Truss and Kwasi Kwarteng experienced when the latter unveiled the mini-budget in October 2022.
And, as with the aftermath to that event, the violent reaction in bonds was caused by forced selling.
Now part of the selling appears to have been down to investors concluding, probably rightly, that Trump’s tariffs would inject a big dose of inflation into the US economy – and inflation is the enemy of all bond investors.
Part of it appears to be due to the fact that the US Treasury had yesterday suffered the weakest demand in nearly 18 months for $58bn worth of three-year bonds that it was trying to sell.
But in this particular case, the selling appears to have been primarily due to investors, chiefly hedge funds, unwinding what are known as ‘basis trades’ – in simple terms, a strategy used to profit from the difference between a bond priced at, say, $100 and a futures contract for that same bond priced at, say, $105.
In ordinary circumstances, a hedge fund might buy the bond at $100 and sell the futures contract at $105 and make a profit when the two prices converge, in what is normally a relatively risk-free trade.
So risk-free, in fact, that hedge funds will ‘leverage’ – or borrow heavily – themselves to maximise potential returns.
Immediate rewards
The sudden and violent fall in US Treasuries this week reflected the fact that hedge funds were having to close those trades by selling Treasuries.
Confronted by a potential hike in borrowing costs for millions of US homeowners, consumers and businesses, the White House has decided to rein back its tariffs, rightly so.
It was immediately rewarded by a spectacular rally in equity markets – the Nasdaq enjoyed its second-best day ever and its best since 2001, while the S&P 500 enjoyed its third-best session since the Second World War – and by a rally in US Treasuries.
The influential Wall Street investment bank Goldman Sachs immediately trimmed its forecast of the probability of a US recession this year from 65% to 45%.
Of course, Trump will not admit he has blinked, claiming some investors had got “a little bit yippy, a little bit afraid”.
And it is perfectly possible that markets face more volatile days ahead: the spectre of Trump’s tariffs being reinstated 90 days from now still looms and a full-blown trade war between the US and China is now raging.
But Trump has blinked. The bond vigilantes have brought him to heel.
This president, who by his aggressive use of emergency executive powers had appeared to be more powerful than any of his predecessors, will never seem quite so powerful again.
Let’s take a look at the state of the markets in the UK now.
While it’s too soon to gauge the reaction here to Donald Trump’s tariffs reversal, the FTSE 100 – the index of most valuable companies listed on the London Stock Exchange – finished down by 2.92% earlier today.
That puts it at its lowest level since March 2024, 13 months ago.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said today was a blow for investors.
“Wednesday has turned into wipeout for equities as the trade war has taken on another twist of escalation,” she said.
“The internationally-focused FTSE 100 has dived deeper into the red, with losses accelerating following the retaliatory action.”
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Tariffs latest: Markets rally after Trump levy pause – but US-China trade war escalates – Sky News
