U.S. markets rallied sharply on Wednesday after President Donald Trump announced a sudden reversal on sweeping tariffs, opting instead for a flat 10% import tax on goods from most countries. The policy shift, aimed at calming global markets and growing recession fears, sent the S&P 500 soaring 9.5%—its biggest single-day gain since 2008.
The move comes just a day after Trump’s aggressive tariffs took effect, catching Wall Street off-guard and sparking a sell-off that wiped out trillions in market value. Countries like Vietnam, hit with a 46% tariff under the initial policy, were among those spared under the revised plan.
While Trump offered a reprieve to most U.S. trade partners willing to negotiate, he doubled down on China, hiking tariffs to at least 125% “effective immediately.” The decision comes despite China being America’s third-largest source of imports, including a dominant share of footwear and apparel.
The Dow Jones rose 7.8%, and the Nasdaq jumped over 12% amid the policy pivot. Shares of companies heavily reliant on global supply chains led the charge—Nike surged 11%, and Apple gained 15%.
Still, the gains weren’t enough to erase all recent losses. The S&P 500 remains down 3% from before the tariff saga began and more than 8% for the year.
“Although President Trump held his ground through the equity sell-off, the bond market cracking was the final straw,” said Paul Ashworth, chief North America economist at Capital Economics. “He’s now reverted to the simpler 10% universal tariff he once campaigned on.”
Analysts remain cautious, with Goldman Sachs updating its economic outlook hours after Trump’s announcement. The firm now forecasts a 45% chance of a recession this year, even assuming moderated tariff levels.
Trump, speaking Wednesday afternoon, acknowledged the market volatility but defended his broader trade goals. “I saw last night where people were getting a little queasy,” he said, adding that he still plans to target strategic industries like steel, cars, and pharmaceuticals.
The sudden shift came amid mounting political pressure in Washington—and from high-profile supporters like Elon Musk, investor Bill Ackman, and media personality Dave Portnoy, all of whom had urged a pause.
“Thank you on behalf of all Americans,” Ackman posted shortly after the announcement.
While the pause brought temporary relief, economists warn that the broader trade conflict—particularly with China—is far from over.
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