On April 9, 2025, President Donald Trump announced a 90-day suspension of tariffs exceeding 10% for most countries, while simultaneously increasing tariffs on Chinese imports to 125%. This policy shift led to a significant surge in U.S. stock markets, with major indices experiencing substantial gains.

The S&P 500 jumped 9.5% to close at 5,456.90, the Dow Jones Industrial Average rose 7.9% to 40,608.45, and the Nasdaq Composite surged 12.2% to 17,124.97. The technology sector, particularly the "Magnificent Seven" tech stocks—including Nvidia, Apple, Tesla, Microsoft, and Alphabet—collectively added over $1 trillion in market value. The Nasdaq's 12% increase marked its largest one-day gain in 24 years.

Prior to this announcement, President Trump had implemented a series of tariffs aimed at addressing trade imbalances and protecting domestic industries. In February 2025, the administration imposed a 25% tariff on imports from Canada and Mexico, and a 10% tariff on imports from China, citing national security concerns and the need to combat illegal drug trafficking. These measures were part of the broader "America First Trade Policy" initiated in January 2025, which sought to correct longstanding imbalances in international trade and ensure fairness across the board.

The recent tariff suspension provided temporary relief amid a tense trade climate and ongoing doubts about the sustainability of large-scale AI investments. Despite the market rally, major indices remained down for the year and from early April highs. Analysts at Goldman Sachs estimate that the 125% tariff on Chinese imports could reduce China's GDP growth by up to 2.9 percentage points.

In Congress, the tariff pullback sparked mixed reactions. Republicans largely welcomed the move, viewing it as a strategic adjustment, while Democrats criticized it as erratic and politically motivated. The announcement, made unexpectedly during a Congressional hearing, caught many officials off guard, including U.S. Trade Representative Jamieson Greer.

Internationally, countries like Japan, South Korea, and India have expressed interest in negotiating, indicating growing pressure to stabilize the trade environment. China's State Council released a white paper urging resolution through "equal-footed dialogue and consultation," highlighting the need for de-escalation.

This development followed a period of market volatility triggered by the administration's earlier aggressive tariff plans, which had raised concerns about potential economic slowdowns. The recent policy shift appears to have temporarily alleviated some of these concerns, leading to a positive market response.

The immediate effects of the tariff suspension have been positive for the markets, but the long-term implications remain uncertain. The administration's approach to trade policy continues to evolve, and its impact on the global economy will be closely monitored in the coming months.