American stocks sank on Thursday, giving back some of the huge gains that followed United States President Donald Trump’s decision the day before to temporarily lower his sweeping tariffs on dozens of countries, as investors assessed the status of his global trade war.
The S&P 500 index was down 5.2 per cent on Thursday afternoon, while the Nasdaq dropped 6.1pc and the Dow Jones Industrial Average was down 4.5pc.
The European Union (EU) said it would pause its first counter-tariffs, and more than a dozen countries have made offers to the United States, according to White House economic adviser Kevin Hassett.
Trump’s sudden decision on Wednesday to freeze most of his hefty new duties for 90 days brought relief to battered markets and anxious global leaders, even as he ratcheted up a trade war with China. The White House said that tariffs on China are now effectively 145pc after counting levies that Trump charged soon after becoming president.
But Trump’s whipsaw approach has companies still worried about the potential fallout and scrambling to prepare for what could happen in three months.
His turnabout, less than 24 hours after the tariffs kicked in, followed the most intense episode of financial market volatility since the early days of the Covid-19 pandemic.
The EU had been due to launch counter-tariffs on about €21 billion ($23.25bn) of US imports next Tuesday in response to Trump’s 25pc tariffs on steel and aluminium. It is still assessing how to respond to US car tariffs and the broader 10pc levies that remain in place.
“We want to give negotiations a chance,” European Commission President Ursula von der Leyen said on X. But she warned that the counter-tariffs could be reinstated if negotiations “are not satisfactory”.
The Trump administration is close to reaching agreements with some countries, Hassett told reporters at the White House on Thursday.
“USTR has informed us that there are maybe 15 countries now that have made explicit offers that we’re studying and considering and deciding whether they’re good enough to present the president,” Hassett added, referring to the US trade representative.
Principals in the administration’s trade policy will meet at the White House on Thursday to discuss how to prioritise the separate negotiations, Hassett said. Thursday’s stock drop came despite US data showing consumer prices fell unexpectedly in March. However, the improvement in inflation is unlikely to persist if high tariffs on Chinese goods remain in place.
