S&P 500

Overview for April 10

US indices jump up to 12% on tariff pause

Major US indices on Wednesday: Dow +8%, NASDAQ +12%, S&P 500 +9.5%, S&P 500: 4,983, trading range: 4,800–5,700.

So, China is introducing retaliatory tariffs against the United States at a rate of 84%. This is a response to Trump's tariffs—104% in total on goods from China. Such a tariff level is prohibitive and effectively shuts down normal trade. Reports already suggest that some major importers such as Amazon are halting cargo ships carrying goods from China to the United States.

US Treasury Secretary Scott Bessent called China's countermeasures a foolish move and urged negotiations. Similarly, a day earlier, Trump who first imposed those tariffs stated that China allegedly intends to make a deal. It is quite clear that Trump wants China to ask him for a deal. However, it is also clear that this is a matter of saving face for Chinese President Xi Jinping—asking the person who attacked you to negotiate. So far, China's statements have sounded like: "We are ready to fight to the end." It is quite evident that a rupture in trade relations will hit both countries hard, but I personally believe China will suffer more than the US.

Markets surged midday when Trump announced a 90-day pause on new tariffs. However, Trump added that this only applies to countries that did not introduce retaliatory measures. And immediately after, Trump announced that tariffs on China would rise to 125%.

This sent US indices sharply higher, with oil jumping from $60 to $64 per barrel.

Within about thirty minutes, US market capitalization recouped $3.5 trillion following the announcement of the 90-day tariff pause.

A bit later, Treasury Secretary Scott Bessent said the tariff rate for countries willing to negotiate with the United States would be reduced to 10%, including Canada and Mexico.

"Every country in the world who wants to come and negotiate, we are willing to hear you," Bessent said.

Later still, Trump reiterated that China "wants to make a deal" on tariffs with the US, but Xi is "is a proud man. I know him very well. They don't know quite how to go about it but they'll figure it out." In this way, Trump continues to hope that Beijing will be the first to propose an agreement and make concessions.

Goldman Sachs lowered its estimate of the probability of a U.S. recession to 45%, from 65% a day earlier, following Trump's decision to pause tariffs for 90 days except those targeting China. The bank said the remaining tariffs still in effect will likely raise the average effective US tariff rate by 15%.

Conclusion: The market rally was partly driven by the perception that amid the chaos caused by Trump's "tariff war against everyone," by the evening of April 9, it was beginning to look more like a targeted campaign — a trade war against one opponent: China. That is still a major issue, but far less threatening than a US trade war with the entire world. Moreover, there is still a chance that a US-China trade agreement may be reached — and if it is, markets will almost certainly rally once again.