It took just one impulsive social media post to rewrite the global financial mood. On Wednesday, US President Donald Trump unexpectedly paused his sweeping tariff regime—excluding China. The event triggered one of the most dramatic stock market surges in recent memory. While Asian markets erupted in jubilation and Wall Street posted its third-best day since 1940, seasoned observers would be wise to temper their optimism. The 90-day tariff “pause” may have calmed the waters for now, but beneath the surface, dangerous currents continue to swirl.
President Trump’s decision could be said anything but the result of a carefully orchestrated strategy. Despite White House officials scrambling to frame the move as part of “the art of the deal,” the suddenness and tone of the announcement betray its reactive nature. Only days earlier, the administration had unveiled a harsh new reciprocal tariff regime, rattling markets, raising fears of a global recession, and prompting selloffs in US Treasurys. The tipping point, it appears, came not from negotiations or any sort of economic modelling, but from the mounting anxiety in the bond market—an arena Trump himself described as “getting a little queasy.”
Markets responded with relief because the worst-case scenario had been narrowly averted. Japan’s Nikkei 225 soared 8.2 per cent, South Korea’s Kospi rose 4.9 per cent, and even the beleaguered Hang Seng gained 2.8 per cent. The US S&P 500 shot up 9.5 per cent, while the Nasdaq posted its best day in over two decades, leaping 12.2 per cent. The fear that Trump's tariffs could plunge the world into a recession had been temporarily subdued. Yet this rally masks the fragility of the current economic environment. Trump's decision to exempt most countries—excluding China—from his steep tariff hikes may have restored some investor confidence, but the continuation and escalation of punitive tariffs on Chinese goods to 125 per cent underscores that the core conflict remains unresolved. Beijing, unsurprisingly, responded with renewed defiance. The world's two largest economies remain locked in a tit-for-tat trade war that has already inflicted substantial damage on global supply chains and investor sentiment. Moreover, the erratic nature of Trump’s tariff diplomacy raises serious concerns about predictability and governance.
A policy that reverses course within 24 hours based on market jitters cannot be said to be a strategy. It is rather volatility masquerading as vision. Analysts and investors alike are left trying to decode presidential moods rather than policy blueprints. As Democratic Senator Adam Schiff aptly noted, such abrupt reversals risk creating “dangerous opportunities for insider trading,” inviting legitimate questions about market manipulation and fairness.
For India, too, Trump’s pause offers a short-term reprieve. The previously imposed 26 per cent tariff on Indian imports had sent shockwaves through its markets. Now, with time bought for fresh negotiations, India has a window to secure a mutually beneficial trade deal. New Delhi must act swiftly and decisively, leveraging this diplomatic opening to rebalance trade ties with Washington. The current euphoria in Indian markets is built on sand, not stone. Trump’s “pause” is a band-aid on a self-inflicted wound. If anything, the episode has revealed how exposed global markets are to political whims and impulsive decision-making. Stability, not surprise, should be the currency of international trade relations. Until the Trump administration embraces consistency over theatrics, and until the US-China standoff finds a durable resolution, the global economy remains at the mercy of the next tweet.