Markets rally on surprise tariff pause, but sharp China hike and volatile policy leave business leaders wary

THUNDER BAY – BUSINESS – April 9, 2025 – In a dramatic turn, U.S. President Donald Trump announced a 90-day suspension on many new tariffs Wednesday, sparking a historic rebound on Wall Street and lifting investor sentiment—at least temporarily.

The S&P 500 surged 9.5%, marking its biggest one-day percentage gain since October 28, 2008, during the height of the financial crisis. Canada’s TSX also jumped more than 5%, as markets on both sides of the border clawed back losses following days of tariff-fueled turmoil.

The announcement, made just 24 hours after the tariffs came into effect, temporarily halts duties on goods from dozens of U.S. trading partners. However, it came with a significant caveat: tariffs on Chinese imports have been raised to 125%, an aggressive counterpunch to China’s earlier move to impose an 84% tariff on U.S. goods starting April 10.

Markets Breathe — But Hold Their Breath

The market’s swift rally came after a steep four-day selloff triggered by the April 2 announcement of broad-based tariffs. Over that stretch, U.S. markets lost more than 12%, the worst such decline in five years.

“Markets had been looking for a reason to rally for a few days,” said Carol Schleif, chief market strategist at BMO Private Wealth. “Markets can only sustain extreme conditions for so long before exhaustion sets in, rather like a toddler and a tantrum.”

The sudden about-face offered a moment of relief for battered investors, but questions remain. Kevin Gordon, senior investment strategist at Charles Schwab, cautioned against assuming stability.

“To have a high conviction call on anything right now is a fool’s errand,” said Gordon. “You have to put yourself in the shoes of a business trying to make capital spending or hiring plans. If the rules of the game change daily, it’s hard to function.”

Recession Risk Receding?

The volatility in policy has created an unpredictable economic landscape, but some analysts saw the tariff pause as a meaningful step toward stability. Goldman Sachs responded by reversing its recently issued recession forecast and restoring its prior baseline of economic growth in 2025.

Yet with Trump’s tariff stance continuing to evolve, economists and business leaders are hesitant to celebrate prematurely. Many say the short-term gain masks longer-term uncertainty, particularly if tariff threats return once the 90-day window expires.

By the Numbers

• S&P 500: +470.58 points (+9.49%) → 5,453.35

• Nasdaq Composite: +1,857.06 points (+12.16%) → 17,124.97

• Dow Jones Industrial Average: +2,942.91 points (+7.82%) → 40,588.50

• TSX Composite Index: +5.2% (approximate gain)

Investor sentiment was also buoyed by a strong U.S. Treasury auction. The government’s $39-billion 10-year note sale drew solid demand, with yields coming in below expectations, signaling confidence in U.S. debt even amid policy uncertainty.

Looking Ahead: Earnings and Inflation

All eyes now turn to corporate earnings season, beginning Friday with reports from major banks including JPMorgan Chase. Investors are eager to assess how tariff anxiety and economic volatility have impacted Q1 performance.

Adding another layer to market volatility is the U.S. Consumer Price Index report due Thursday, which could influence the Federal Reserve’s future rate decisions.

Meanwhile, the Federal Reserve’s latest minutes revealed internal debate over the dual risks of persistent inflation and slowing growth. Policymakers flagged potential “difficult tradeoffs,” especially if inflation remains sticky amid global supply chain strain from tariff wars.

Airlines Soar, But Forecasts Falter

Delta Air Lines beat first-quarter profit expectations, boosting shares, but the airline pulled its 2025 guidance and issued a cautious current-quarter profit forecast—reflecting the uncertainty gripping the broader economy.

Conclusion: Tariff Whiplash Far from Over

Wednesday’s stock market rally underscored investor appetite for any sign of clarity amid months of escalating trade tensions. But the mixed signals — a tariff pause for some, escalation for China — underscore the roller coaster nature of U.S. trade policy under Trump’s administration.

For investors, businesses, and policymakers, the 90-day reprieve is less a resolution and more a timeout — a window that could either usher in stability or set the stage for another sharp turn.

Some Conspiracy Theorists Speculate Trump is Manipulating the Market

That speculation is gaining traction—and it’s not entirely baseless.

While there’s no concrete evidence of criminal intent or insider manipulation, the pattern of market-moving tariff announcements and rapid reversals by President Trump has prompted scrutiny from economists, investors, and political observers. The idea that Trump could be using tariff policy as a tool to influence stock market direction—intentionally or not—is not far-fetched, especially given:

1. The Timing and Market Impact Are Clear

• Markets dropped sharply after the initial April 2 tariff announcements—over 12% in four trading days.

• Then rebounded spectacularly—the S&P 500 up 9.5%, TSX up over 5%—after the April 9 reversal and partial tariff pause.

• Trump has a well-known obsession with the stock market as a benchmark of his performance, frequently citing record highs during his previous presidency.

2. Trump’s Own Words Fuel Suspicion

President Trump has previously made public statements indicating a link between his trade decisions and stock market reactions, suggesting a willingness to pivot policy based on market sentiment:

• In 2019, Trump tweeted: “When the Stock Market goes up, it’s because of me. When it goes down, it’s because of everyone else.”

• On April 8, just hours before the reversal, he posted: “Markets will thank me tomorrow. Watch.”

• In 2018, during earlier trade tensions with China, he told reporters: “We have the best cards. I can turn the stock market on and off like a light switch.”

Statements like these lend credibility to concerns that Trump views markets as not just economic barometers, but as tools of political influence.

3. Speculation of Market Manipulation Isn’t New

During his first term, some analysts accused Trump of using strategic leaks and tweets about tariffs or Federal Reserve policy to trigger market rallies or pressure central banks into rate cuts.

In 2019, former Treasury Secretary Larry Summers warned: “The risk that markets are being manipulated at the highest levels of government is real and serious.”

4. Legal and Ethical Questions Remain Murky

For Trump to be legally accused of market manipulation, there would have to be proof of intentional efforts to profit (personally or via associates) from the moves—such as trading stocks based on non-public policy decisions.

No such evidence has surfaced, but the lack of transparency—and Trump’s history of using economic levers for political gain—leaves open the question: Are markets reacting to policy? Or are policies being crafted to provoke a market reaction?

5. Consequences for Investors and Businesses

Whether or not manipulation is occurring, the effect is real:

• Investors face whiplash, as markets surge or crash on presidential proclamations.

• Businesses struggle to make long-term plans, unsure whether tariffs will be implemented, paused, or escalated next.

• Confidence in the integrity of financial markets erodes when policy feels unpredictable or performative.

As Kevin Gordon of Charles Schwab put it this week:

“If the rules of the game change daily, how can businesses make capital decisions?”

Bottom Line: No Proof, But Plenty of Smoke

While there’s no formal investigation or hard evidence of deliberate stock market manipulation, the pattern of abrupt, market-moving announcements—coupled with Trump’s own rhetoric and priorities—make the speculation difficult to ignore.

In Thunder Bay and across Canada, where the economy is deeply linked to global trade and U.S. policy decisions, the volatility adds another layer of uncertainty for exporters, resource producers, and investors watching every tweet as closely as economic indicators.