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The S&P 500 surged by 9.5 per cent overnight after US President Donald Trump announced what he described as a "pause" on so-called reciprocal tariffs, bringing all countries but China down to the same rate of 10 per cent that Australian exporters will face in the US market.
Describing what has transpired as "the art of the deal" in reference to his 1987 book of the same name, Trump framed a recent blanket 10 per cent tariff introduction globally as a pause even though its very existence was unthinkable to most two months ago.
The US President also ratcheted up the rhetoric and tariff rates against China after the major trading partner retaliated to the trade war escalation by announcing an 84 per cent tariff on US goods. In response, Trump lifted tariffs on Chinese goods again from 104 per cent to 125 per cent.
The market rally, with the NASDAQ index up 8.42 per cent, appears to suggest that investors don't believe such exorbitant tariffs on goods from China - the USA's second-largest source of imports - will endure. The market is only down 1.18 per cent over the past month.
On the social media platform Truth Social that he owns, Trump said he was lifting the tariff charged to China to 125 per cent based on an alleged "lack of respect" the country has shown to world markets.
He claimed that more than 75 countries had called representatives of the United States, including the Departments of Commerce, Treasury, and the United States Trade Representative, to negotiate a solution to subjects raised by the US Government around trade.
Trump said that because of these calls, he had authorised a 90-day "pause" and a "substantially lower reciprocal tariff during this period, of 10 per cent, also effective immediately".
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