What is Tariff by Trump, US Stocks Surge 9.5% After Policy Shift
The tariff policy shift by President Trump has brought temporary relief to the US stock market, but the long-term effects of the trade war remain to be seen. With China seeking to "tariff-proof" its economy and the EU expected to approve countermeasures, the global trade landscape is undergoing significant changes, affecting economies and trade relationships worldwide.
US stocks experienced a significant surge of 9.5% on Wednesday following President Trump's announcement to suspend steep tariffs on most countries and impose a 10% import tax rate instead, a move seen as a response to rising pressure from influential figures and politicians.
The decision came less than 24 hours after tariffs on Vietnam and other countries took effect, which had sparked a 10% plunge in the S&P 500. The S&P 500, Dow, and Nasdaq all experienced significant gains, with notable increases in shares of Nike and Apple, rising 11% and 15% respectively. This shift in policy is expected to alleviate some of the economic challenges posed by the ongoing trade war, particularly with China, which remains a significant trade partner for the US.
The trade war between the US and China has led to reciprocal tariff increases, with China raising its tariffs on US goods to 84%. This move could make US goods more expensive for Chinese importers, potentially cutting off US producers from a significant market. The US exports a substantial amount of goods to China, including oilseeds, grains, oil and gas, and pharmaceuticals, which supported over 931,000 American jobs in 2022.
President Trump expressed hope for a deal with China and is considering granting exemptions to individual companies. The US states that export the most to China include Texas, California, Louisiana, and South Carolina, with these exports valued at billions of dollars. The ongoing trade tensions have raised concerns about recession and have wiped trillions of dollars off the market value of major firms.
As the trade war continues to evolve, the global economy remains uncertain. The EU and China have announced retaliatory measures, and the US has imposed tariffs on dozens of countries. The situation is being closely monitored, with many hoping for a resolution that will stabilize the global markets and promote economic growth.