Trump tariffs latest: Pause sees stock markets surge but 125% measure against China takes effect
Main Points
- Donald Trump abruptly cut US tariffs to 10% for 90 days – except for China, which is hit with 125%
- European Commission president Ursula von der Leyen welcomed the pause in Trump’s higher rate of tariffs, saying it was an “important step towards stabilising the global economy”.
- The move followed sell-off of US Treasury bonds which threatened to increase the cost of borrowing
- China’s countermeasures have taken effect, raising tariffs to 84%, yuan weakens to lowest level since 2007
Key reads
Financial markets may have welcomed Trump’s pause on higher, but it is not all good news. American imports taxes are still at an historic high and economists say a US recession is still a risk.
Higher import taxes raise costs for domestic consumers and businesses and reduce real disposable incomes and profit margins, while retaliatory measures by other countries threaten to damp US exports. The tariffs also tend to make investment more expensive, economists say.
Full story here.
‘Substantive, calm, measured dialogue’ with US required – Harris
Cormac McQuinn reports: Tánaiste and Minister for Foreign Affairs Simon Harris has briefed EU Trade Commissioner Maroš Šefčovič on his talks in Washington with US commerce secretary Howard Lutnick.
Mr Harris and Mr Šefčovič also discussed the ongoing European preparations for engagement with the US.
Speaking this morning, Mr Harris said: “It has been my consistent position and the consistent position of the Irish Government and the European Union that we need to get into substantive, calm, measured dialogue with the United States.
“It has always been our preference that would have happened before tariff announcements. Clearly that was not the position of the United States.
“However, after my discussions yesterday, it is now clear to me that such engagement and negotiation is likely.”
Mr Harris said this needed to happen in “a timely fashion” and that “all sides need to engage in good faith because uncertainly and turmoil is not the way forward”.
“The trading relationship between the EU and the US is worth €1.6 trillion per year. It’s massively important in terms of jobs, growth and investment in Ireland, across the European Union and in America,” he said.
“Yesterday’s discussions with Secretary Lutnik were an opportunity to be updated directly and to gain an insight into the US position on a range of these matters.
“I look forward to further engagement with my European counterparts in the hours and days ahead.”
Stocks in South Korea rallied on Thursday by the most in five years while Japan’s equities recorded the biggest gain since August as a reprieve in higher US tariffs lured buyers back to the beaten-down markets.
South Korea’s Kospi Index soared 6.6 per cent, a day after entering a bear market. Japan’s benchmark Topix index rose 8.1 per cent and the Nikkei 225 Stock Average gained 9.1 per cent.
Across Asia, equity markets bounced back sharply along with currencies after President Donald Trump announced a 90-day pause on higher tariffs that hit dozens of trade partners. But a degree of caution persisted as traders remained uncertain about the prospects of a long-term resolution to the crisis.
“Investors across Asia and beyond are breathing a sigh of relief,” said Frederic Neumann, chief Asia economist at HSBC Holdings Plc. “The postponement of reciprocal tariffs by the US allows more time for negotiations. For export-centered Asian economies this is especially important, given the growth impact steep US tariffs would have had.” – Bloomberg
European Commission spokesman for Economic Security and Trade, Olof Gill has said the European Commission will continue to respond to US tariffs “in a calm, coherent way.”
Speaking on RTÉ radio’s Morning Ireland, Mr Gill said it was too early to say precisely what was going to happen next. “I think we can all agree that the situation is volatile, changing day by day, sometimes hour by hour. So we’re going to proceed as we’ve been doing all along, which is to look at the problem in a calm, coherent way.
“The European Commission which is responsible for EU trade policy on behalf of the entire European Union will continue to talk to our member states, will continue to talk to industry and we will plot a careful course forward on that basis.
‘EU has lot of cards to play’
Vivienne Clarke reports: The former Irish ambassador to the US Dan Mulhall has said the European Union “has a lot of cards to play” in negotiations with the US in regard to tariffs.
“American companies are very active throughout Europe. They have a privileged position. They make huge profits from the European single market. Remember, the trading relationship between the EU and the United States is the biggest one in the world. It’s almost a trillion dollars in two-way trade. And that’s just in goods,” he told RTÉ radio’s Morning Ireland.
“And then there’s a services trade. So the services trade is a big plus card for the European Union, because that’s an area where the United States has a surplus with the European Union. And that’s a card that they can play I think effectively to try to leverage a deal that will be beneficial for both sides,” he said.
“Obviously they have to give something to the United States to sweeten the deal for them, but I think it’ll be worth making some concessions on the part of the European Union and I’m sure the commission already has a list of things that they could offer the Americans by way of concession.”
“You need to go into these negotiations hoping that both sides can come out and declare victory and Donald Trump will declare victory … but whatever the outcome is, he’ll come out and say: ‘this is a great deal and only I could have made this’.
“And that’s the kind of outcome that he’s looking for, and that kind of an outcome would be okay with me too, because as long as we get a deal that doesn’t wreck the global trading system, that doesn’t destroy transatlantic trade or put it in shackles, that would be a good day for Europe, for the United States, and in particular for Ireland because after all we are more exposed to transatlantic trade than any of our European partners are in percentage terms.”
Mr Mulhall added that he was “fairly optimistic” that a deal could be “wrapped up” within the 90 day pause. “He’s had this kind of edge-of-the-cliff moment, and he’s backing away from it. So why would he now go back to imposing tariffs and creating further turbulence?
“I think perhaps a lesson may have been learned, and this may have been the only way in which Donald Trump’s mind could have been changed, that he started to be shown the real consequences of what he was doing.
“Of course, it’s possible that he will decide to go after the pharma industry and impose tariffs on pharma. But, you know, I think there’s a reasonable chance that the pharma tariffs will be paused and they will become part of this general negotiation between the European Union and the United States, which I believe ought to be successful because the EU is a very experienced trade negotiator.
“Now okay there’s still a 10 per cent tariff but that’s more manageable than the 20 per cent tariffs. So, this is a good day for our economy, for the prospects, for some kind of rapport between the EU and the US developing.
“We must hope, keep our fingers crossed, that [Maroš] Šefčovič and his team will be able to come up with the goods and produce the kind of agreement that will put things back to the way they were before the so-called Liberation Day.”
Europe Correspondent Jack Power on von der Leyen’s comments on the latest Trump:
European Commission president Ursula von der Leyen welcomed the pause in Trump’s higher rate of tariffs, saying it was an “important step towards stabilising the global economy”.
The head of the EU executive arm, which is leading the union’s tariff response, said the import levies only hurt businesses and consumers.
“That’s why I’ve consistently advocated for a zero-for-zero tariff agreement between the European Union and the United States,” she said.
The German politician said the EU “remains committed to constructive negotiations with the United States, with the goal of achieving frictionless and mutually beneficial trade”.
The EU would also look at diversifying its trade partners, beyond the US, she said. The current crisis had made it clear the EU had to push forward with its own reforms of its single market.
“My team and I will continue to work day and night to protect European consumers, workers and businesses. Together, Europeans will emerge stronger from this crisis,” she said – Reuters
In markets news, global shares surged and a manic bond sell-off stabilised on Thursday after Donald Trump said he would temporarily lower the hefty duties he had just imposed on dozens of countries.
However, the sharp overnight rally in US stocks and the dollar lost steam as a trade war between the United States and China ratcheted up, with investors also perplexed over the flip-flopping of the Trump administration’s tariff plans.
Following a days-long market rout that erased trillions of dollars from global stocks and jolted US Treasury bonds and the dollar, Trump on Wednesday announced a 90-day pause on many of his new tariffs in a shock reversal.
That pushed European futures up sharply in the Asian session, with EUROSTOXX 50 futures and DAX futures climbing nearly 8 per cent each, while FTSE futures gained 5.4 per cent.
Japan’s Nikkei similarly advanced more than 8 per cent.
But Wall Street took a breather after a towering rally overnight, as investors struggled to come to terms with the US administration’s economic policies. – Reuters
Ciara O’Brien writes: It has been a rollercoaster few days for the markets as US president Donald Trump announced plans for reciprocal tariffs on most countries – and then hit pause for 90 days.
The one exception is China, which is facing tariffs of more than 100 per cent as the US ratchets up the trade war. The country has imposed its own 84 per cent tariffs on US imports coming into the country, and tensions between the economic superpowers remain high.
The rest of the world is in damage control mode. Asian markets saw their biggest jump in more than two years following the announcement, and European equity futures surged.
Investors may be breathing a sigh of relief for now, but with trade relations in such a volatile state, that may not last for long.
Pharma tariffs
Last night, Mr Trump said he would go ahead with pharma tariffs to get companies to relocate to the US, though Tánaiste Simon Harris said he hopes the 90-day period would give a chance to negotiate on this, writes Pat Leahy.
Speaking in Washington, DC, last night after a meeting with US secretary of commerce Howard Lutnick, Mr Harris said lower tariffs would come as a relief to Irish exporters but that further contacts between Washington and Brussels were needed to clarify this.
He said he told Mr Lutnick what was needed was “substantive and meaningful engagement” between Europe and the US “because if we have seen anything in the last few days it is the turmoil and uncertainty the tariffs have brought”.
He said Mr Lutnick told him Mr Trump had “five sectors that he wants to take action in relation to tariffs and pharma is one of them”.
“I certainly made the point that actually Europe and Ireland is not the challenge here: that we actually have an opportunity to collaborate in a way that is good for the US, good for Ireland, good for the EU.”
Trump’s U-turn on tariffs fails to reassure markets and trading partners
US president Donald Trump announced a 90-day ceasefire in the worsening global trade war last night, but deep uncertainty continues to spook the global economy, financial markets and America’s trading partners after the sudden move, writes Keith Duggan
After repeatedly insisting there would be no change in his tariff policy, Mr Trump blinked last night when he dramatically cut tariffs on all countries to 10 per cent for 90 days – except for China, which has been hit with 125 per cent tariffs immediately.
After days of massive losses on the stock markets since the tariffs were announced last week, the pressure on the Trump administration intensified yesterday with a sell-off of US Treasury bonds which threatened to increase the cost of US government borrowing and put the country’s ability to finance its massive deficits in doubt.
The trend caused significant disquiet among market analysts, who warned of potentially catastrophic consequences for the global financial system if there was a mass sell-off of US Treasuries – which some market watchers feared was already under way.
After a bullish speech to Republicans in Washington, DC, on Tuesday evening, Mr Trump continued to insist he was not for turning and promised that more tariffs on pharmaceuticals would soon follow.
But as markets wobbled again on Wednesday morning, Mr Trump made what appeared to be efforts to restore some confidence in a series of social-media posts.
“BE COOL! Everything is going to work out well,” he posted in midmorning as global financial markets continued to show signs of turmoil. “The USA will be bigger and better than ever before!”
A few minutes later he added: “THIS IS A GREAT TIME TO BUY!!!”
But the president’s exhortations failed to reassure markets and as the day went on there were increasing worries about the bond market, traditionally a safe haven for investors in times of turmoil on the markets, as the trade war seemed set to worsen.
China imposed 84 per cent tariffs on US goods in return for US tariffs of more than 100 per cent on Chinese imports. In Brussels, European Union member states voted to begin retaliating against the US tariffs after they came into effect on European imports yesterday morning.
Yesterday evening Mr Trump announced an abrupt U-turn in a lengthy social media post.
Mr Trump said he would implement a “90-day pause”, reducing the tariffs announced last week to 10 per cent. This means the 20 per cent tariff on Irish and other EU goods has been paused for now and will stand at 10 per cent.
He said this applied to countries that “have not, at my strong suggestion, retaliated in any way, shape, or form against the United States”.
The EU’s retaliatory tariffs have not yet come into effect.
But Mr Trump also said he would raise the tariff on Chinese goods to 125 per cent “effective immediately” – intensifying the conflict between the world’s two most powerful economies and setting the stage for further uncertainty as other countries decide how to react.
