United States President Donald Trump issued a 90-day pause on "reciprocal tariffs" and lowered the tariff rate to 10% on countries that do not retaliate with counter-tariffs.
The president also said he would increase the reciprocal tariff rate on China to 125% due to the country's counter-tariffs against the US. Trump wrote in an April 9 Truth Social post:
"At some point, hopefully, in the near future, China will realize that the days of ripping off the USA, and other Countries, is no longer sustainable or acceptable."
According to data from TradingView, the S&P 500 index rallied close to 7% following the announcement, showcasing the high volatility of capital markets amid the macroeconomic uncertainty and the potential for a protracted trade conflict.
Source: Donald Trump
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Markets experience high volatility following every Trump announcement
Capital markets are currently experiencing extraordinarily high volatility, swinging between price extremes in response to tariff announcements made by President Trump.
The stock market wiped away trillions of dollars in shareholder value within days of Trump signing the reciprocal tariff order, only for the pendulum to swing the other way every time a pause in the tariffs was announced or Trump walked back his rhetoric.
On April 7, rumors began circulating on social media that Trump was considering a tariff pause, triggering the US stock market to rally and add $2 trillion in value in hopes of a pause.
Stocks rebound following Trump’s tariff pause. Source: TradingView
The volatility index, a measure of the S&P 500 stock market index's volatility, broke above 60 on April 7 — the highest level since the unwinding of the yen carry trade in August 2024.
At the time of this writing, the VIX had dropped to 37.5, which still signals extreme market volatility despite the dramatic drop in the last two days.
The Volatility S&P 500 Index dropped dramatically following Trump’s tariff pause announcement but remains elevated. Source: TradingView
BitMEX founder and market analyst Arthur Hayes recently predicted that a devaluation of the Chinese yuan as a response to the Trump administration's trade tariffs could spark capital flight into crypto.
Hayes added that devaluations of the yuan led to Chinese investors shifting capital from traditional investments into digital assets in 2013 and 2015.
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