Today was another turbulent day for the stock market, with trillions of dollars erased from financial markets in the lead-up to US President Donald Trump’s “explosive” tariffs.
This morning, Ireland joined several other countries confronted with increased “reciprocal” tariffs.
Yet, by this afternoon, President Trump announced a temporary reduction in new tariffs for many countries, even while escalating tariffs on imports from China, a sudden reversal that drove US stocks sharply upward.
Here are five key takeaways after a whirlwind few hours.
European stocks fell and major Asian markets dropped in the morning as Donald Trump’s grand tariff scheme took effect.
However, the pause on tariffs has undeniably provided a sense of relief for investors concerned about the global economic ramifications of US trade policies.
Notable market turmoil appeared to ease as the Nasdaq index surged by 9% and the S&P 500 climbed to 8%.
The “Magnificent Seven” stocks stand to gain over $1 trillion in market value, alleviating pressure on tech giants.
Canada and Mexico’s primary stock market indexes responded positively to news of their inclusion in the flat rate of 10% tariffs from the United States.
Beginning the day at 0.4%, Canada’s TSX soared to 3.78%, while Mexico’s IPC rose to 2.90% from 0.22%.
The “Magnificent Seven” stocks could gain more than $1 trillion in market value, providing relief to tech giants.
“The stock market right now is beautiful,” remarked Donald Trump from the White House following his tariff adjustment.
2. The Art of the Deal?
So, was this indeed the intended strategy all along? Or did the Trump administration yield?
Following the announcement of his radical tariff plan, various world leaders hurried to negotiate with Donald Trump.
The Trump administration would contend that numerous countries have come forward to negotiate free and fair trade for the United States.
This was the “strategy all along,” according to US Treasury Secretary Scott Bessent, who spoke to the media from the White House.
Meanwhile, President Trump’s trade advisor, Peter Navarro, told Fox News that “all the nervous nellies” on Wall Street underestimated the president’s negotiating power.
However, Trump conceded to reporters at the White House that he paused the tariffs due to concerns that people were “jumping out of line and getting a bit yippy.”
The President faced growing pressure on multiple fronts: a volatile market, concerns over US Treasury bonds, recession fears, and Congressional Republican attempts to reclaim tariff authority.
All of these genuine and legitimate concerns became too significant and serious to overlook.
3. United States vs China
During the pause, a universal tariff of 10% will be implemented. However, one country remains unaffected.
China is the exception, as it chose to retaliate.
China imposed additional levies of 84% on all US goods.
This is an increase from the previously announced 34% tariffs.
This retaliation followed US tariffs of 104% on its imports, in response to President Trump’s “bullying behavior.”
Now, Trump is intensifying matters, stating he would raise tariffs on Chinese imports to 135%, “effective immediately.”
Nonetheless, reaching an agreement with China is still an option for Mr. Trump.
The World Trade Organization has warned that the goods trade between the United States and China could decrease by up to 80%, amounting to over a $400bn decline in trade between the two nations.
A confrontation between the world’s two largest economies is ongoing, and no one will be untouched by the fallout of their trade war.
4. Uncertainty Persists
What comes next? What will happen after 90 days?
These are the million (trillion?) dollar questions.
The next three months will bring significant uncertainty for businesses, consumers, and investors as Trump’s final tariff policy remains uncertain.
To heighten this uncertainty, Trump indicated he might consider exempting some US companies from the tariffs during the 90-day pause.
He suggested that deals can be made with everyone, promising “fair deals for everybody.”
Tánaiste Simon Harris, who met Commerce Secretary Howard Lutnick in Washington, expressed appreciation for the 90-day reprieve but questioned whether it would be sufficient.
While Goldman Sachs has retracted its recession forecast in light of Trump’s announcement, experts continue to warn that this situation is far from resolved.
Diane Swonk, Chief Economist at KPMG, told the New York Times: “This is nuts. Damage done. Market relief is a head-fake unless the administration makes a significant course correction. Uncertainty acts as its own tax on the economy.”
Additionally, we must remember that the Trump administration has indicated intentions to announce a “major” tariff soon on pharmaceutical imports, aimed at incentivizing drug companies to relocate their operations to the US.
A pharma tariff would significantly impact the Irish Government, given the pharmaceutical sector’s importance in the Irish economy, providing thousands of well-paid jobs and contributing billions of euros in Corporate tax.
While the status of this move remains uncertain, the Irish Pharmaceutical Healthcare Association has warned of “very significant risks” to future capital and R&D investments resulting from the tariffs.
5. Where are the Democrats?
Since last year’s election, the Democrats have been grappling to articulate their opposition to a Republican-led White House and Congress.
Their resistance message hasn’t garnered much attention during a potentially opportunistic moment amid self-inflicted economic instability.
Senate Minority Leader Chuck Schumer, who was initially slated to address the press regarding the impact of tariffs, responded to recent developments.
“Let me be clear, Donald Trump is feeling pressure from Democrats and across America regarding the damaging effects of these tariffs,” he stated.
With Trump pausing amid market turmoil and mounting criticism, Democrats now have a rare chance to capitalize on this moment, provided they can unify around a cohesive message.
