Stocks surged Tuesday afternoon, fueled at least in part by tempered expectations around the severity of President Donald Trump’s potential tariffs.
The Dow Jones Industrial Average soared 448 points, or about 1%, the S&P 500 index climbed about 0.8%, and the Nasdaq index ticked up 0.65%.
While Trump signed a swath of executive orders on his first day in office, ranging from return-to-office mandates for federal workers to moving to end birthright citizenship, his tariff talk was much softer than analysts had expected.
“While we did not expect major policy pronouncements so soon following inauguration, Trump’s comments on China were notably less hawkish than during the presidential campaign or even his more recent comments since the election,” Goldman Sachs (GS+1.09%) analysts said in a research note Tuesday.
The president has threatened universal tariffs of between 10% and 20% on all imports, but Trump said on Monday that “we’re not ready for that just yet.” Trump also threatened 60% to 100% tariffs on imports from China. He and Chinese President Xi Jinping discussed trade, TikTok, and fentanyl during a call on Friday, Trump said in a Truth Social post.
As a result, Goldman lowered its odds of a roughly 20-percentage point tariff hike on imports from China from 90% to 70%, but maintained the scenarios as its base case.
The newly inaugurated president did, however, threaten tariffs on some of America’s largest trade partners. Trump said he plans to hit Mexico and Canada with tariffs of as much as 25% as soon as Feb. 1, saying that the countries haven’t met the criteria he laid out for them to avoid him making good on his threats.
“We’re thinking in terms of 25% on Mexico and Canada, because they’re allowing vast numbers of people” across the border, along with fentanyl, Trump said Monday night in response to questions from reporters in the Oval Office.
Analysts at Goldman noted, however, that in 2019 Trump also said he would impose a tariff of up to 25% on Mexico within 10 days. That tariff was never implemented.
Trump has also refused to rule out implementing tariffs to help the U.S. buy Greenland from Denmark, make Canada part of the U.S., and acquire the Panama Canal.
— William Gavin contributed to this article.
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