A trader is seen operating with computer screens on the trading floor of the Frankfurt Stock Exchange, next to a TV featuring U.S. President Donald Trump on a news channel in Frankfurt, Germany, the day after Trump declared a 90-day hiatus on tariffs.
Martin Meissner/AP
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Martin Meissner/AP
Stock markets in Europe and Asia saw significant increases on Thursday, paralleling the gains made on Wall Street the previous day, in reaction to President Donald Trump’s surprising announcement of a pause on his elevated global tariffs.
The FTSE 100 in London experienced a notable rise at the trading day’s outset, with its counterparts in Frankfurt and Paris also reporting over 5% increases by mid-morning local time.
Japan’s Nikkei index closed up 9.1%, while South Korea’s Kospi concluded the day with a 6.6% gain, lifting the Seoul index out of bear territory.
In Taiwan, the stock market surged by 9.25% on Thursday, marking a notable recovery after earlier this week witnessing its largest single-day decline on record.
Hong Kong’s Hang Seng Index gained 2% by the end of trading, while major indices in mainland China saw only marginal increases, hindered by the impending rise of tariffs on Chinese goods.
Investors are closely monitoring Beijing for any signs of retaliatory measures following President Trump not only excluding China from his tariff pause but also increasing tariffs on Chinese exports to 125%. This increase was announced just hours after Beijing declared additional duties of 84% on certain American goods entering China.
Global market relief — at least temporarily
Trump’s substantial tariffs had only been enacted for about 12 hours on Wednesday when he declared a suspension for the following 90 days. This announcement was made during trading hours on Wall Street, causing U.S. stocks to rally.
The U.S. president shared on Truth Social early Thursday, “What a day, but more great days are ahead!!!”
Before this pivot, the policies had resulted in considerable disruption, erasing trillions in value from global stock markets. The White House’s actions had also led to a sharp rise in U.S. government bond yields, causing concern among investors and economists alike.
“I thought people were overreacting; they were getting a bit jittery, you know,” Trump commented during public remarks in the Oval Office, using a term typically associated with nervousness in golf.
European reactions and retaliations
In Europe, leaders expressed relief mixed with some frustration regarding the decision to cut tariffs on most EU exports to just 10% for the upcoming 90 days, while the higher 25% tariffs on steel, aluminum, and cars will remain in effect. “Clear and predictable conditions are crucial for trade and supply chains to function,” stated Ursula von der Leyen, president of the European Commission, which oversees the EU’s trade policies.
On Wednesday afternoon, the Commission had announced that tariffs on certain U.S. exports would commence this month as a response to previously announced 25% tariffs on metals, with additional “countermeasures” set to be implemented in May and December.
However, on social media Thursday, von der Leyen indicated that the EU aimed to “give negotiations a chance” in light of Trump’s 90-day suspension, announcing that the Commission would also pause its retaliatory tariffs for the same duration.
She cautioned that the EU would continue exploring other potential retaliatory measures and added, “if negotiations do not yield satisfactory results, our countermeasures will be enacted.” Investors in Europe, on Wednesday, began to reduce their expectations concerning possible rate cuts by the European Central Bank, which would otherwise have been a potential response to the recession risks posed by the tariffs. Conversely, a French ECB member, François Villeroy de Galhau, remarked on French radio that Trump’s suspension of high tariffs was merely “a less bad development than before,” warning that “there remain two adverse factors: unpredictability, which undermines confidence and growth, and protectionism.”
In the U.S., the CBOE Volatility Index—a measure of stock fluctuations colloquially known on Wall Street as the “fear gauge”—had previously reached its peak at the day’s close, the highest level seen since the height of the COVID-19 pandemic in 2020.
Simultaneously, yields on government bonds within the Eurozone increased, indicating that investors were no longer inclined to secure their funds in financial assets perceived as safer than stocks, as capital flows shifted back to the unpredictable equity markets.
China continues to navigate high U.S. trading costs
Experts remain divided on whether Trump’s increased tariffs on China will significantly affect the country’s economy. However, Goldman Sachs revised its economic growth forecasts for China’s GDP in 2025 downwards due to the adverse impacts of tariffs, adjusting it from 4.5% to 4%.
Regardless, many investors are advocating for a resolution to the ongoing trade war between the U.S. and China, the two largest economies globally.
Nonetheless, Lin Jian, a spokesperson for China’s foreign ministry, asserted on Thursday that China is ready to persist in its efforts. “Let me emphasize that tariff wars and trade wars leave no victors. China is not eager to engage in such conflicts, but will not shy away when they are imposed upon us,” Lin stated at a scheduled press briefing.
Trump expresses optimism for a deal with Xi
During remarks made from the Oval Office on Wednesday, Trump reiterated his previous claim that China would ultimately be open to negotiations with the U.S.
“President Xi is very strategic, and I believe we will eventually secure an excellent agreement,” he remarked.
The president additionally noted that he did not foresee any need for the U.S. to escalate tariffs further to coax Beijing to the negotiating table.
“I can’t envision that happening,” he stated.
China has indicated its willingness to negotiate, but on the condition that the U.S. administration modifies its approach.
“If the U.S. genuinely seeks dialogue, it should demonstrate respect, equality, and mutual benefit,” Lin reiterated on Thursday.
Asian countries welcome extended time for U.S. negotiations
Conversely, other Asian nations expressed relief, appreciating the additional time granted for tariff negotiations and the avoidance of higher tariffs. Nonetheless, a base tariff of 10% will remain applicable to all countries during the 90-day pause on elevated tariffs that primarily targeted Asian production hubs like Vietnam and Cambodia.
New Delhi is eager to progress rapidly towards a revised trade agreement with the Trump administration, which both parties had earlier projected would take years to finalize.
However, Indian officials have also announced that they will begin to closely monitor imports to prevent low-priced Chinese products from being dumped into India amidst the ongoing tensions between the two global superpowers.
Ashish Valentine contributed to this report.
