Trump tariff rumour sparks fleeting £2 trillion market surge
According to a seven-minute rumour, Donald Trump is considering a 90-day suspension of tariffs for all countries except China. During this time, the US stock market suddenly improved, with stock values increasing by about £2 trillion. Soon after, declines occurred again.
On Monday afternoon, Greenwich Mean Time, the US stock market unexpectedly turned positive again, having been dominated by losses for most of the day. "The extent of market declines has also been significant across the ocean. The US S&P 500 index lost 2.8 per cent, while the Nasdaq fell by 3.7 per cent. An equally large decline of 3.7 per cent affected the Russell 2000 index, which tracks smaller companies' stock prices.
Suddenly, the situation changed, and instead of being "deep in the red," it turned green. On the social media platform X, a rumour about the alleged suspension of Donald Trump's tariffs for an additional 90 days spread rapidly. This information was published by Reuters, followed by Yahoo Finance and the Economic Times. CNBC also reported on these rumours. Suddenly, major indices on Wall Street changed course and surged upward, according to Reuters.
This was enough for stock values to increase by approximately £2 trillion for a few minutes compared to earlier declines.
Investors don't want tariffs
Bloomberg observes that the market responded positively to speculation about a potential suspension of tariffs. The outlet points out that if Trump follows through with maintaining the tariffs, the economy could swiftly shrink, dragging the S&P 500 into bear market territory. On the other hand, lifting the tariffs could stimulate economic growth and help stocks return to record highs.
According to Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, if Trump were to suddenly reverse his stance and announce that he would abandon the plan, markets would undoubtedly rebound to reach fresh highs, Bloomberg reported.
The market rally, however, was short-lived. The White House dismissed the reports from Reuters and CNBC, labelling them as false. Bloomberg notes that the Trump administration is providing conflicting signals — while some cabinet officials suggest that talks on reducing tariffs are underway with as many as 50 to 70 countries, White House trade adviser Peter Navarro maintains that there is no room for negotiation.
On Monday, Donald Trump acknowledged that while permanent tariffs are possible, there could also be room for negotiations, as some issues extend beyond the scope of tariffs alone. Meanwhile, investors remain uncertain about how to make sense of these signals.
Alec Young, the chief investment strategist at Mapsignals, believes that if such a policy is implemented and remains in place for an extended period, it will fundamentally reshape the US stock market. He noted that the market anticipates these kinds of structural changes, driven by the political outlook for the Republicans. According to Young, Republican control could be jeopardized in the 2026 elections if voters become concerned about a potential recession and are frustrated by losing around 20 percent of their investments in just a few days. He suggested that turmoil in the stock market might ultimately force the current ruling party out of office.
