U.S. markets staged their biggest rally in five years on Wednesday after President Donald Trump announced a 90-day pause on his newly enacted reciprocal tariffs for most countries, while sharply increasing duties on Chinese imports to 125%. The move fueled investor optimism and triggered a powerful rebound across all major indices.
The Dow Jones Industrial Average surged 2,962.86 points, or 7.87% to close at 40,608.45, marking its largest single-day gain since 2020. The S&P 500 jumped 9.52% to settle at 5,456.90, while the Nasdaq Composite soared 12.16% to end at 17,124.97, led by gains in technology and retail stocks. Apple climbed more than 11%, Nvidia rallied 13%, and Walmart rose nearly 10%.
"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," Trump posted on Truth Social Wednesday morning. "I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately."
The White House confirmed that the new 125% tariff rate on Chinese imports was effective immediately, citing what Trump described as the lack of respect that China has shown to the World's Markets. The president said more than 75 countries had reached out to initiate talks with U.S. officials following the rollout of the tariffs earlier this month.
Commerce Secretary Howard Lutnick wrote on social media that he and Treasury Secretary Scott Bessent were with Trump as he drafted the post. "The world is ready to work with President Trump to fix global trade, and China has chosen the opposite direction," Lutnick stated.
Bessent later clarified that all nations except China would see a return to the baseline 10% tariff rate while negotiations are underway. He noted that the pause does not apply to sector-specific tariffs and that he would personally oversee the negotiation process going forward.
The move temporarily relieved anxiety in a market that had been battered by an escalating trade conflict. In the four days preceding the announcement, the Dow had dropped more than 4,500 points, while the S&P 500 and Nasdaq each posted double-digit losses.
"This allows for at least a near-term rally, but I would not assume that the bottom has been put in place," said Sam Stovall, chief investment strategist at CFRA Research. "Fool me once shame on you; fool me five times, shame on me."
Trump's tariff shift comes amid mounting global economic pressure. The European Union, China, and Canada have already initiated retaliatory measures, with the EU set to implement its first set of counter-tariffs beginning April 15.
