U.S. stocks surged on Wednesday after President Donald Trump announced a temporary reprieve on some of his tariffs, renewing hope on Wall Street that a full-scale trade war could be avoided.
The S&P 500 jumped 1.1%, recovering from a recent sell-off that had erased much of its post-election gains. The Dow Jones Industrial Average rose by 485 points, or 1.1%, while the Nasdaq composite added 1.5%.
The market’s sharp rally was triggered by Trump’s announcement that he would grant a one-month exemption to U.S. automakers from his new tariffs on imports from Mexico and Canada. The decision followed discussions with major automakers, including Ford, General Motors, and Stellantis, the parent company of Chrysler.
The move was seen as a positive for automakers, who could have faced significant disruptions due to the extensive cross-border production between the U.S., Mexico, and Canada. Stocks of Ford and General Motors both surged more than 5%, leading a broad-based market rally.
Concerns had been mounting that these tariffs would not only hurt corporate profits but also drive up prices for consumers, particularly for cars, adding to the inflationary pressures already facing U.S. households. Investors are now hopeful that Trump is using the tariffs as a negotiation tool and that more moderate actions could be implemented if the U.S. secures favorable terms in trade talks.
However, Trump did not back down entirely from his tariff stance. Tariffs on other major trading partners, including China, remain in place. Additionally, analysts caution that Trump’s latest move could add to the ongoing uncertainty in the market. Just days earlier, Trump had indicated that there was no room for negotiations to reduce tariffs on Mexican and Canadian imports, which had caused a market sell-off.
“The economic impact and consumer impact is still ahead of us,” said Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute. “It comes back to what no one really knows, and that is how long these tariffs stay in place.”
