Background and Decision
The recent shift in U.S. trade policy, particularly the announcement of a 90-day tariff pause for many countries, has led to a temporary easing in the global trade conflict. U.S. President Donald Trump announced a 90-day pause on certain tariffs on imports from almost all countries, with the exception of China. During this period, a universal tariff rate of ten percent remains in place, while country-specific penalties are temporarily suspended. This decision followed significant turbulence in international stock markets and aims to facilitate negotiations with the affected countries.
Impacts on the Markets
The announcement of the tariff pause has led to a strong recovery in the stock markets. The Dow Jones Industrial rose by about 7.87 percent, while the S&P 500 increased by 9.52 percent. The Nasdaq 100, heavily influenced by tech stocks, gained even 12.02 percent. This development shows that the markets are responding positively to an easing in the trade conflict and could benefit from potentially improved trading conditions.
Impacts on Tech Stocks
In particular, tech stocks have benefitted from the announcement. Shares of companies such as Amazon, Meta, Nvidia, Alphabet, Microsoft, Apple, and Tesla recorded price gains between 6.4 and 14.0 percent. These companies are heavily dependent on international trade flows, and a relaxation in the trade climate could improve their business conditions.
Reactions from the EU and China
The European Union has also suspended some of its countermeasures for 90 days in response to the U.S. decision. EU Commission President Ursula von der Leyen emphasized that the EU wants to give negotiations a chance. China, on the other hand, has responded to U.S. tariff increases with its own counter-tariffs, further escalating the trade conflict.
Uncertainty and Future Developments
Despite the temporary easing, the situation remains uncertain. Many companies are hesitant to invest as the long-term impacts of trade policy are unclear. The 90-day pause offers a chance for negotiations, but it is uncertain whether a lasting solution will be found. The EU has already announced that it will reinstate its countermeasures if negotiations do not proceed satisfactorily.