U.S. stocks posted significant gains after Donald Trump suggested he could exempt some nations from the reciprocal tariffs due to take effect next week.
The S&P 500 rose 1.8 percent on Monday, the Dow Jones Industrial Average gained 1.4 percent, and the Nasdaq Composite climbed 2.3 percent.
Why It Matters
The U.S. stock market has been thrown into turmoil by the administration’s tariff plans, with the on-again, off-again implementation and anticipated impacts on several industries resulting in downturns for most major indexes in recent weeks.
Trump’s statements could encourage nations to make a push for exemptions that, if successful, could mitigate some of the negative effects the tariff plans have had on major U.S. indexes.
What to Know
Speaking at the White House on Monday, in response to a question on whether any countries would be exempt from the administration’s “reciprocal tariffs,” Trump said: “I may give a lot of countries breaks.”
“It’s reciprocal, but we might be even nicer than that,” he added.
In mid-February, the president signed a memorandum directing the development of a plan for “restoring fairness in U.S. trade relationships and countering non-reciprocal trading arrangements.”
The plan, intended to address “longstanding imbalances in international trade,” outlined a program to impose equal duties on imports from countries that tariff U.S. goods.
“Whatever they charge us, we’re charging them,” Trump said of the plan last week.
Trump has said that these tariffs are due to take effect on April 2, which he has referred to as “Liberation Day.”
The comments came amid a continued downturn for U.S. stocks. The three major indexes—the S&P 500, the Dow Jones Industrial Average and Nasdaq Composite—are down 3.2 percent, 2.4 percent and 4.4 percent, respectively, in the past month. As a result, U.S. stocks have lagged their counterparts in Europe and China in recent weeks.
Tesla was the biggest winner of Monday’s rally, its share price climbing 11.9 percent on the day, which added nearly $100 billion to the company’s valuation. Chip-maker Nvidia similarly added $90 billion to its market cap on the back of a 3.2 percent increase in its share price.
What People Are Saying
Trump on Monday said: “We may take less than what they’re charging, because they’ve charged us so much I don’t think they could take it. In other words, they’ve charged us so much that I’m embarrassed to charge them what they’ve charged us. But it’ll be substantial and you’ll be hearing about that on April 2.”
Treasury Secretary Scott Bessent told Fox Business last week that the administration’s tariff policies would focus on “the dirty 15″—the 15 percent of nations which run consistent trade surpluses with the U.S., and which he said impose “substantial tariffs” on U.S. goods.
Bessent added that he was “optimistic” many of the reciprocal tariffs would not go into effect on April 2, as countries will attempt to “pre-negotiate” deals to avoid this.
Economist Franklin Allen, in response to Chinese stocks outpacing the U.S. in recent weeks, told Newsweek: “In my view, the essential reason that the Chinese stock market is going up while the U.S. market is going down is that investors are beginning to realise the U.S. tech stocks are overvalued and China tech stocks have been undervalued.”
What Happens Next
In addition to reciprocal tariffs on countries that are not able to negotiate an exemption in time, several other tariffs are set to be unveiled on April 2, including those covering products such as cars, pharmaceuticals and semiconductors.
However, recent reports from the Wall Street Journal and Bloomberg, citing anonymous officials, suggest that the product-specific tariffs may not be announced on “liberation day.”
In addition, the 30-day pause placed on the 25 percent tariffs on Canada and Mexico is also set to expire on this date.
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