In a dramatic twist to the ongoing global trade conflict, former U.S. President Donald Trump announced late Wednesday an immediate hike in tariffs on Chinese imports from 104% to 125%, sending shockwaves through international markets. Despite the escalation, U.S. indices staged a powerful rally as investors digested the full scope of Trump’s trade strategy.
At 10:56 PM IST, the Dow Jones Industrial Average surged by 2,207 points or 5.86% to 39,853.15, while the Nasdaq jumped 1,227 points or a massive 8.04% to 16,495.56. The S&P 500 also saw a sharp rally, climbing over 6.7% earlier in the day.
The market rally comes even as Trump intensified the trade war with China, stating in a Truth Social post:
“Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately.”
He said China could no longer continue “ripping off” the U.S. and other countries. The statement followed days of heightened tensions after the U.S. imposed a 104% tariff earlier this week, which prompted China to retaliate by raising its tariffs on U.S. goods from 34% to 84%.
Trump added that over 75 countries have reached out to the U.S. government to discuss trade concerns. As a result, he announced a 90-day pause in the newly announced reciprocal tariffs for countries that have not retaliated against the U.S. During this period, a substantially lowered 10% tariff will apply.
China responds with policy stance On the same day, China released a white paper outlining its position on U.S.-China trade. The document reiterated China’s commitment to WTO norms, highlighted reforms in market access and IP protections, and condemned what it called U.S. unilateralism.
Despite the heated rhetoric, the tone of the white paper suggested openness to dialogue, with Beijing urging for trade cooperation on the basis of mutual benefit and respect.
Markets react with optimism Wall Street’s positive reaction may be driven by hopes that the tariff pause could open up space for negotiations with several U.S. allies and non-retaliatory trading partners. The relief from further escalation beyond China may have eased investor anxiety in the short term.
Meanwhile, Gift Nifty futures surged 460 points or 2.01% to 22,947.50, mirroring the global risk-on sentiment.
