Trump’s trade war: US markets open in red again, gains after ‘tariff pause’ wiped out

US stocks plunged on Thursday, reversing a portion of their historic gains from Wednesday, as concerns over global trade war continue to rattle Wall Street.
The S&P 500 index was down 3 per cent in early trading, following Wednesday’s dramatic 9.5 per cent rally, its third-best performance since 1940.
The Dow Jones Industrial Average followed a similar route, dropping 981 points, or 2.4 per cent, while the Nasdaq Composite slid 3.7 per cent as of 10.10 am eastern time.
The dip followed a surprisingly strong inflation report and a better-than-expected update on jobless claims. Economists, however, warned that the inflation data reflects only the past and provides little reassurance for what lies ahead. There are also growing fears that inflation could accelerate again if tariffs continue to weigh on consumer and business costs.
President Donald Trump’s sudden decision to pause a number of tariffs globally triggered Wednesday’s surge, but markets remain cautious. Trump is still pressing ahead with steeper tariffs on Chinese goods—raising them to a punishing 125 per cent. Even a potential negotiation that reduced them to 50 per cent would still pose a major threat to US corporate earnings, UBS strategist Bhanu Baweja cautioned.
In response, China has been quietly building alliances with other global players to push back against Washington’s trade stance. The European Union, meanwhile, said on Thursday that it would delay its retaliatory measures for 90 days, signalling hope for a diplomatic resolution.
Trump and treasury secretary Scott Bessent issued a pointed message following the tariff pause: “Do not retaliate, and you will be rewarded.”
Despite that, market watchers remain on edge. The S&P 500 is still trading below levels seen before Trump’s announcement of sweeping tariffs last week, and investors are bracing for further volatility.
There was a glimmer of relief in the bond market, where conditions appeared to stabilise after days of turbulence. Earlier in the week, a sharp rise in US Treasury yields had unnerved investors. At one point, the 10-year Treasury yield surged to nearly 4.50%, up from 4.01% just days earlier, amid speculation that hedge funds and overseas investors were dumping US debt.
Overseas, markets surged in their first session since the tariff pause. Japan’s Nikkei 225 climbed 9.1 per cent, South Korea’s Kospi gained 6.6 per cent, and Germany’s DAX jumped 5.2 per cent.