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April 9, 2025
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Market Wire: Risk Appetite Surges After Trump Announces 90-Day Tariff "Pause"

Financial markets are surging after Donald Trump announced a ninety-day pause in additional reciprocal tariffs on most US trading partners, paired with an increase in levies on imports from China.

In a post on Truth Social, his social media platform, the American president said “Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately,” saying that he hoped the Asian manufacturing giant would realise that “ripping off” the US and other countries is “no longer sustainable or acceptable”. Further, given that other countries had not retaliated “in any way, shape, or form”* against the United States, Trump said he was authorising a ninety-day pause and a “substantially lowered” baseline 10-percent tariff during that period.

The capitulation comes after an extreme multi-day selloff in global financial markets, and on the heels of vocal complaints from many of the president’s biggest political backers.

Treasury yields are coming down and most North American equity indices are exploding higher. In foreign exchange markets, the US dollar is recovering from the morning’s losses, the Canadian dollar and Mexican peso are soaring, and recent safe-haven bets—like the euro and Japanese yen–are easing off.

After markets successfully put the administration on notice, the announced “pause” seems likely to be extended beyond ninety days. But investors can’t breathe easy: a 10-percent tariff still represents a major hit to the global economy and American households, and persistently-elevated uncertainty is likely to drag on growth for a prolonged period of time. Volatility expectations in the currency markets could remain high for now.

*Other countries did retaliate, but it might be best to keep that on the down low for now : )

About the author

Karl Schamotta

Karl Schamotta

Chief Market Strategist