United States President Donald Trump on Wednesday paused steep tariffs on America’s trading partners barring China, instead imposing a blanket 10 percent tariff on goods imported from these nations and territories.
The 90-day pause came within 24 hours of the duties taking effect.
The pausing of most additional tariffs, which had roiled the stock market, sent US major stock indices soaring to one of their biggest single-day gains since World War II, even though they remain nearly 11 percent below their February 19 peak under Trump.
Three hours before he announced the pause, Trump encouraged investors to buy stock.
In the aftermath, Democrats have accused Trump of market manipulation, using his announcements to first crash stocks before creating a short window when those who bought shares would gain dramatically.
Trump’s allies have denied the charge, but his critics are now calling for Congress to investigate him.
So what happened, could the market whiplash have benefitted investors who listened to Trump, and why has this angered some Democrats?
Why did Trump pause the tariffs?
Trump announced the three-month reprieve from the tariffs on Wednesday, amid negotiations with more than 75 countries to reduce the levies on their goods, he said.
The US president said that all the countries that had not retaliated against his tariffs would only face a 10 percent blanket tariff until July. He suggested his pause was strategic – to reward those countries that agreed to work towards a deal with him.
“I thought that people were jumping a little bit out of line, they were getting yippy, you know,” Trump explained when asked why he announced the pause while speaking to reporters.
Trump announced these tariffs on April 2, ranging from 12 percent to 50 percent, on about 60 trading partners that he claimed were guilty of imposing disproportionately high levies on US imports. These tariffs took effect on Tuesday.
Additionally, Trump had announced – also on April 2 – a flat 10 percent tariff on products coming from almost all other trading partners of the US. These tariffs came into force on April 5.
The tariff pause does not apply to China. On April 2, which Trump dubbed “Liberation Day”, China was hit with a 34 percent tariff on top of an existing 20 percent tariff. This set off a sequence of tit-for-tat actions by China and the US, each raising tariffs on the other. China has, as of now, imposed an 84 percent tariff on US products. Trump, meanwhile, has increased the levy on Chinese goods to 125 percent.
In the week that followed the announcement, the US’s three major stock indices – the Dow Jones Industrial Average, S&P 500 and Nasdaq – dropped by more than 5 percent. This was the biggest stock market decline in the US since 2020, amid the COVID-19 pandemic.
The US Treasury bond market came under selling pressure. The 10-year benchmark government bond yield, which moves inversely to its price, fell after Trump announced the tariffs. On Thursday, the Treasury yields started to drop.
Were all tariffs paused?
No.
The tariff pause does not apply to China. On the April 2 “Liberation Day”, China was hit with a 34 percent tariff on top of an existing 20 percent tariff. This set off a sequence of tit-for-tat actions by China and the US, each raising tariffs on the other. China has, as of now, imposed an 84 percent tariff on US products. Trump, meanwhile, has increased the levy on Chinese goods to 125 percent.
All other countries and territories – including those which the US has a trade surplus with, or a free trade agreement with – have still been hit with a 10 percent tariff rate.
Had Trump previously indicated that a pause was possible?
Quite the opposite.
Before announcing the pause, Trump and his close aides had repeatedly held that the tariffs would not be paused or rolled back. Commerce Secretary Howard Lutnick told CNN last week: “I don’t think there’s any chance that President Trump’s going to back off his tariffs. This is the reordering of global trade.”
On Monday, White House Press Secretary Karoline Leavitt described a news report suggesting the possibility of a 90-day pause in tariffs as “fake news”.
‘Great time to buy’: What’s the controversy?
But about four hours before Trump announced the pause in tariffs, he posted on his Truth Social platform, saying: “THIS IS A GREAT TIME TO BUY!!!”
After Trump’s later pause announcement, the S&P 500, which tracks the stock performance of 500 leading US companies, surged 9.5 percent. This marked one of the biggest one-day gains in 80 years for the index. The Nasdaq also jumped by 12.2 percent and the Dow Jones Industrial average grew by nearly 3,000 points.
This means that investors who listened to Trump’s Truth Social advice and bought into the market yielded large returns. On the other hand, investors who sold assets during the market drop before the tariff pause, lost money.
Why is Trump being accused of market manipulation?
Democrats have accused Trump of deliberately creating market fluctuations by flip-flopping between imposing and lifting tariffs. They want Trump to be investigated for market manipulation, the act of deliberately misleading free-flowing markets for profit.
California Senator, Democrat Adam Schiff, posted on X, saying that “these constant gyrations in policy provide dangerous opportunities for insider trading”.
Schiff questioned: “Who in the administration knew about Trump’s latest tariff flip-flop ahead of time? Did anyone buy or sell stocks, and profit at the public’s expense?”
In a separate post, the senator released a video of himself reiterating his suspicions about whether Trump’s inner circle “illegally profited” from the stock market swings. “Congress must find out,” he wrote.
Is Donald Trump’s inner circle illegally profiting off of these huge swings in the stock market by insider trading?
Congress must find out. pic.twitter.com/ZZGX99PtFE
— Adam Schiff (@SenAdamSchiff) April 9, 2025
Suspicions about investors knowing about Trump’s pause plan before he made the announcement were also fuelled by the fact that Nasdaq call volumes spiked less than 20 minutes before Trump announced the tariff pause.
Democrat Congresswoman Alexandria Ocasio-Cortez reposted screenshots showing the call volume spike in an X post. “Any member of Congress who purchased stocks in the last 48 hours should probably disclose that now,” she wrote. “It’s time to ban insider trading in Congress.”
Trump’s trade representative Jamieson Greer was testifying to a House of Representatives committee when Trump made the announcement. Democrat Steven Horsford, a Nevada congressman, asked Greer why he had not disclosed the decision to pause tariffs. “I don’t disclose my conversations with the president, sir,” Greer responded.
“If it was a plan, if it was always the plan, how is it not market manipulation?” Horsford said. Greer responded, saying that this was not market manipulation, and the Trump administration was instead “trying to reset the global trade system that has offshored all our factories.”
