WASHINGTON (MaceNews) – As U.S stocks rocketed up spectacularly Wednesday after President Trump’s pivot on tariffs, the battle of titans – the USA and China – emerged as the main event for months to come.
At an afternoon White House event, President Trump said, “Somebody had to do it,” vs. China. A more skeptical former Democratic Treasury Secretary Larry Summers told CNN, “Bullies back down when there’s great pressure.”
What President Trump did was to first raise tariffs against China by 125% as China went to 84% vs. the USA, before surprising everyone with his Truth Social posting that paused most other new tariffs for three months.
However the base 10% across-the-board tariffs remain in place, tariffs targeting autos continue, while Treasury Secretary Scott Bessent negotiates “bespoke” tariff levels with more than 75 other countries. The sudden reversal on Trump’s part did not rule out other sudden changes in policy to come, leaving the atmosphere of uncertainty in place.
Meanwhile the U.S. stocks rocket rally was historic. Seeing the Dow Jones Industrial Average go from deep in the red to a 2,700 point 7% gain, with the S&P up 5.7% and the Nasdaq up 11.4% would have seemed to be a fantasy only a few hours earlier.
As fears of a coming recession evaporated for the moment, share prices of many firms went up by double digit percentages. Bally’s Corp was up 37%. Bitcoin dominated MicroStrategy rose 26%. Kohl’s gained 24%. Delta Airlines was up 23% and its airline peers did much the same. Robinhood Markets jumped 23% as did AMD. Tesla shares rose 21%.
Trump administration officials, like Treasury Secretary Bessent in an afternoon appearance in the White House briefing room, spread out to insist the tariffs pivot and the focus on China was the plan all along. Not surprisingly there was a wave of commentary to the effect Trump blinked in the face of five trading days of huge losses for U.S. stocks and the overnight surge in interest rates, the escalating selloff across asset classes and a weakening of the dollar.
President Trump’s 1:18p ET Truth Social posting hit the market like a lightning strike. “I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately,” he wrote. “At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable.”
The faceoff between the U.S. and China appeared to threaten a coming shortage of pharmaceuticals, for which China is America’s main supplier by far. At the same time President Trump Tuesday night threatened to impose sweeping tariffs on pharmaceutical industry trade “soon.”
But it was evident Wednesday afternoon that while the Trump administration’s era of uncertainty was not ended the extreme market pessimism since a week ago’s “Liberation Day” seemed to have been turned around – at least for the time being.