Reuters Morning Report - Tariff Policy Undergoes Major Reversal

The following is a summary of major news and market updates from 5:00 PM on April 9 to 7:00 AM on April 10:

– Trump to raise tariffs on China to 125%, but temporarily lowers tariffs on most countries

U.S. President Trump announced on Wednesday that he would temporarily lower the high tariffs recently imposed on dozens of countries while further increasing pressure on China, a stunning reversal that sent U.S. stock markets soaring. This shift came less than 24 hours after imposing new hefty tariffs on most trade partners. Prior to this, financial markets had experienced the most severe volatility since the early days of the COVID-19 pandemic, with stock markets evaporating trillions of dollars in market value and U.S. Treasury yields rising unsettlingly, seemingly catching Trump's attention.

In the latest twist, Trump stated that he would suspend targeted tariffs on other countries for three months to allow U.S. officials time to negotiate with countries seeking to lower tariffs. However, Trump continued to apply pressure on China, raising tariffs on Chinese imports from 104% to 125%, effective at midnight. Previously, China had raised tariffs on U.S. goods to 84%.

The White House indicated that Trump's withdrawal of tariffs on specific countries is not absolute, and the 10% blanket tariff on nearly all U.S. imports will remain in effect. This statement also appears not to affect the already implemented tariffs on automobiles, steel, and aluminum.

The 90-day tariff suspension does not apply to U.S. tariffs on Mexico and Canada – White House officials

The World Trade Organization (WTO) estimates that U.S.-China trade tensions could reduce goods trade between the two economies by as much as 80%.

Trump stated that the 90-day suspension of tariffs on countries that did not retaliate is believed to ultimately lead to an agreement with China.

After Trump announced the 90-day suspension of tariffs, traders significantly reduced bets on the Federal Reserve cutting interest rates this year.

– China to raise tariffs on U.S. goods to 84%, U.S. extreme pressure meets China's extreme countermeasures

China announced further countermeasures against the U.S. on Wednesday evening. The State Council Tariff Commission announced that starting from 12:01 PM on April 10, the tariff rate on imported goods originating from the U.S. would be raised from 34% to 84%. The Ministry of Commerce of China simultaneously announced that starting from 12:01 PM on April 10, 12 U.S. entities, including Photon Company, would be added to the export control list, and six U.S. companies involved in arms sales to Taiwan, including Shield AI, would be added to the unreliable entity list.

Analysts believe that U.S.-China economic and trade relations may enter a "shock" state in the short term, with the Chinese government's uncompromising stance being "well-prepared" and possibly aimed at "pressuring for talks," pushing the U.S. to the negotiating table more quickly. There are concerns that the trade war could evolve into a financial war, with escalating conflicts and prolonged cycles of confrontation, making outcomes uncertain and causing abnormal volatility in stocks, bonds, and currencies, leading to continuous turmoil in global markets.

U.S. Treasury Secretary Mnuchin expressed regret over China's imposition of an 84% retaliatory tariff, calling it a failed proposition for the Chinese government.

The Ministry of Commerce of China: Suing the U.S. over the latest tariff measures under the WTO dispute resolution mechanism– Chinese Premier: Timely introduction of new incremental policies as needed to respond to external uncertainties with strong measures

Chinese Premier Li Qiang stated that in the face of new changes in domestic and international situations, it is particularly important to do a good job in economic work for the second quarter and beyond. All work must continue to strengthen and be more effective; new incremental policies should be introduced in a timely manner according to the situation, using strong and effective policies to respond to uncertainties in the external environment. Li Qiang made these remarks at the "Economic Situation Expert and Entrepreneur Symposium," emphasizing the need to implement more proactive and effective macro policies to promote the rapid implementation and effectiveness of established policies.

– EU votes to impose tariffs on a range of U.S. goods, joining China and Canada in retaliation

EU member states agreed that the EU will launch its first countermeasures against U.S. President Trump's tariffs next week, joining China and Canada in retaliation, escalating global trade conflicts. The EU will impose a 25% tariff on a range of U.S. imported goods starting next Tuesday, specifically in response to U.S. metal tariffs. The EU is still assessing how to respond to tariffs on automobiles and broader taxation. The European Commission stated in a release: "These countermeasures can be suspended at any time if the U.S. agrees to a fair and balanced negotiation outcome."

– U.S. Treasury Secretary Becerra: Possibility of reaching a tariff agreement with U.S. allies, aligning with China is self-destructive

Becerra stated that he believes the Trump administration may reach a tariff agreement with U.S. allies. He is preparing to negotiate with over 70 countries in the coming weeks. He also warned that closer cooperation with China could backfire. Becerra pointed out that many countries have shown strong interest in negotiating with the U.S. to reduce tariffs. He mentioned that President Trump has already held talks with leaders from Japan and South Korea, and U.S. officials will meet with a Vietnamese delegation on Wednesday. He added that the comprehensive reciprocal tariffs announced by Trump last week represent the upper limit of tariffs, provided that countries do not take retaliatory measures. However, China has not adopted this suggestion.

– China's March CPI expected to turn from negative to flat, PPI decline widens to 2.3%, Spring Festival disturbances fade

According to a Reuters survey of 40 institutions, influenced by a low base and the fading of Spring Festival misalignment factors, China's Consumer Price Index (CPI) for March is expected to turn flat year-on-year, compared to a decline of 0.7% in February; among them, 10 institutions estimate that the March CPI is expected to decline by 0.3% month-on-month, marking the second consecutive month of negative growth. Meanwhile, 34 institutions estimate that due to weak domestic demand pushing down industrial product prices, China's Producer Price Index (PPI) year-on-year decline is expected to slightly widen to 2.3% in March, compared to a six-month minimum decline of 2.2% in February.

– China's Ministry of Culture and Tourism issues risk warning for Chinese tourists traveling to the U.S.

China's Ministry of Culture and Tourism stated that due to the deterioration of China-U.S. economic and trade relations and the internal security situation in the U.S., it advises Chinese tourists to fully assess the risks of traveling to the U.S. and to proceed with caution.

– Federal Reserve meeting minutes: Decision-makers generally believe the economy faces risks of rising inflation and slowing growth

The meeting minutes show that Federal Reserve decision-makers almost unanimously agreed in last month's meeting that the U.S. economy faces risks of rising inflation and slowing economic growth simultaneously, with some decision-makers noting that the Fed may face "difficult trade-offs" in the futureThe meeting minutes also show that last month's decision to significantly slow the pace of balance sheet reduction received broad support from decision-makers, but there were more dissenting voices within the Federal Reserve regarding this adjustment than initially heard.

– Federal Reserve officials indicate they do not intend to quickly cut interest rates, as they expect tariffs to boost inflation.

Federal Reserve officials speaking on Wednesday expressed concerns that President Trump's trade policies could impact economic growth, but they stated they would not respond by quickly cutting interest rates.

St. Louis Fed President James Bullard stated that tariffs could lead to economic growth falling below trend and increase inflation risks.

Minneapolis Fed President Neel Kashkari noted that the comprehensive tariff measures announced last week could unanchor inflation expectations and hurt the economy, making it possible for policy rates to be raised or lowered.

Richmond Fed President Thomas Barkin mentioned that the biggest risk is a decline in consumer spending, but this has not yet occurred.

– ECB decision-makers commit to stabilizing markets but believe the economic impact justifies rate cuts.

ECB decision-makers stated that the European Central Bank is prepared to maintain financial stability in the event of further market turmoil, but the financial industry, including hedge funds, seems well-prepared for the recent downturn. ECB Governing Council member and Bank of France Governor François Villeroy de Galhau said, "In this situation, the Bank of France and the ECB will be fully mobilized to ensure ample financing for the economy and financial stability." Dutch Central Bank President and Financial Stability Committee Chair Klaas Knot stated that hedge funds are responding well; ECB Governing Council member Philip Lane noted that negative risks are emerging, making the case for rate cuts in April stronger.

– CK Hutchison responds to investigation of Panama port concession: Over 1.695 billion Balboas invested to date.

CK Hutchison's Panama port company issued a statement responding to recent concerns regarding the company and its concession, stating that it has invested over 1.695 billion Balboas (1 Balboa = approximately 1 USD) to date, far exceeding the investment amount required in the original concession contract and additional agreements. "Any claims that the Panama port company has not paid approximately 1.2 billion Balboas to the Republic of Panama are absolutely false," the company stated.

– Trump says deal to divest U.S. assets from TikTok "still possible."

President Trump stated that a potential deal to divest TikTok's U.S. assets "is still possible," after the deal was put on hold a few days ago. Trump recently extended the deadline for ByteDance to divest TikTok's U.S. assets to June 19, stating that if an agreement is not reached, the app will be banned in the U.S. Trump has twice delayed the ban originally set to take effect in January.

• The Chinese Ministry of Commerce stated that it has noted the U.S. issued an administrative order to delay TikTok; China respects equal, voluntary, and fair business practices among enterprises, and specific business arrangements must comply with Chinese laws, including technology exports, which must be approved by the Chinese government in accordance with the law.

– Germany's coalition agreement announced, focusing on stimulating economic growth and addressing immigration issues.

Under the leadership of CDU Chairman Friedrich Merz, conservatives have reached a coalition agreement with the center-left Social Democratic Party (SPD), aiming to revive Germany's economic growth amid threats of recession from the global trade war. At the press conference announcing the coalition, Merz sent a message to the White House in English: "The key message to be conveyed to Trump is that Germany is back on track.""He promised to increase defense spending and enhance economic competitiveness. The agreement emphasizes the importance of German-American relations and plans to reach a free trade agreement in the medium term. However, Merz also stressed that the EU needs to collectively address the escalating global tariff war.

– Central Bank of Taiwan: Closely monitor the financing situation of enterprises and implement appropriate financial stability measures and monetary policy responses.

The Central Bank of Taiwan stated that after the implementation of equivalent tariffs by the United States, Taiwan's export growth momentum will be limited, affecting economic growth. It will closely monitor the financing situation of enterprises and adopt appropriate financial stability measures and monetary policy responses, while continuing to pay attention to the inflation development situation in Taiwan. In a written report submitted to the Legislative Yuan, the Central Bank mentioned that it will pay attention to the adjustment pace of monetary policies in major economies and timely adjust monetary policies based on their impact on the local financial situation.

– Exclusive: Apple supplier Luxshare Precision considers production in the United States to address tariff challenges.

Luxshare Precision, an Apple supplier, stated that Chairman Wang Laichun told analysts during a conference call that the company is currently discussing plans with clients to shift more production to other countries, including the United States, to address U.S. tariff challenges. In a conference call minutes seen by Reuters, Wang Laichun pointed out that only a small portion of the company's finished products are exported to the United States and affected by tariffs, which has a relatively small impact on the company's revenue and profits; the company now needs to consider increasing overseas investments and suspending some domestic investment plans in China.

– Zelensky stated that Ukrainian intelligence has information showing that 155 Chinese citizens are fighting for the Russian army against Ukraine. Zelensky said that Russia is recruiting Chinese citizens through social media, and Chinese officials are aware of this. He added that Ukraine is trying to assess whether these recruits are receiving instructions from Beijing.

– Trump signed an executive order aimed at revitalizing the U.S. shipbuilding industry and weakening China's control over the global shipping industry. The executive order directs the U.S. Trade Representative to advance a plan that includes imposing port docking fees on ships manufactured in China or flying the Chinese flag. The U.S. will also push allies to take similar actions.

– Trump threatened again that if Iran does not agree to end its nuclear program, he will use military force, stating that Israel will play a key role in any military action. Trump stated that Iran must not be allowed to possess nuclear weapons, and if Iran refuses to stop its efforts to develop nuclear weapons, he may take military action.

– JP Morgan CEO Jamie Dimon expects an economic recession and borrower defaults, urging for trade negotiations to be expedited.

– According to the Financial Times, UK Chancellor of the Exchequer Reeves stated that in light of global developments such as the Ukraine war and U.S. tariffs, the UK should improve its trade relations with other European countries.

– According to NPR, Nvidia CEO Jensen Huang attended a Mar-a-Lago dinner last week, after which the Trump administration changed its plans to restrict exports of Nvidia H20 artificial intelligence chips to China.

– To encourage listed companies to buy back shares, the Taiwan Stock Exchange stated that it will provide additional points for companies after discussing and approving the implementation situation by the Corporate Governance Evaluation and Consultation Committee(Market Summary)

Stock Market:

– The S&P 500 index surged 9.5% on Wednesday, marking the largest single-day gain since 2008, after U.S. President Donald Trump announced a 90-day suspension of tariffs on many countries, effective immediately, which alleviated some investor concerns about the impact of U.S. trade policy on the global economy. The Dow Jones Industrial Average rose by 2,962.86 points, or 7.87%, to 40,608.45 points. The S&P 500 index increased by 474.13 points, or 9.52%, to 5,456.90 points, achieving the largest single-day gain since the global financial crisis in October 2008. The Nasdaq index climbed 1,857.06 points, or 12.16%, to 17,124.97 points, marking the largest increase since the internet market bubble in January 2001. (.NCN)

– European stock markets fell further as China raised tariffs on U.S. goods by more than double, leading healthcare stocks to decline after President Trump threatened to impose additional tariffs on specific industries. The pan-European STOXX 600 index plummeted 3.5%, erasing the momentum from the previous trading day. The German DAX index dropped by 3%. The UK FTSE 100 index fell by 2.92%, and the French CAC-40 index closed down 3.34%. (.EUCN)

Foreign Exchange Market:

– The U.S. dollar rebounded against safe-haven currencies like the Japanese yen and Swiss franc after President Trump announced a 90-day suspension of many new tariffs on trade partners but escalated tensions with the Chinese government by raising tariffs on Chinese goods. The dollar rose 1.2% against the yen to 148.80, reversing earlier losses. The dollar increased 1.14% against the Swiss franc to 0.8569 francs. The euro gained 0.11% to 1.09685 dollars. The dollar index edged up 0.11% to 102.88. The dollar fell 1.01% against the offshore yuan to 7.349 yuan, after reaching a historical high of 7.4292. (FRX/CN)

Bond Market:

– The yield on the U.S. benchmark 10-year Treasury narrowed earlier gains after strong demand for the 10-year Treasury auction by the U.S. Treasury, and President Trump announced a suspension of some tariffs on U.S. trade partners. The yield on the 10-year Treasury rose by 12.6 basis points to 4.386%. The yield on the 30-year Treasury increased by 6.1 basis points to 4.776%. The yield on the 2-year Treasury rose by 20 basis points to 3.94%. (US/NCN)

– German bond yields fell sharply in contrast to the significant rise in U.S. yields, as market turmoil triggered by U.S. import tariffs weakened the appeal of U.S. assets. The yield on the German 10-year bond fell by 5 basis points to 2.58%. The yield on the German 2-year bond decreased by 10 basis points to 1.7628%. (GVD/EURCN)

Oil Market:

– Oil prices rose over 4%, rebounding from a four-year low reached earlier in the session, after President Trump stated he would further increase tariffs on China but suspended tariffs on most other economies announced last week. Brent crude futures settled up $2.66, or 4.23%, at $65.48 per barrelU.S. crude oil futures rose by $2.77, or 4.65%, to $62.35. (O/NCN)

Metals:

– Gold prices surged over 3%, marking the best single-day performance since October 2023, supported by safe-haven inflows as U.S. President Trump further raised tariffs on China, escalating trade tensions between the U.S. and China. Spot gold was reported at $3,082.18 per ounce, up 3.3%, having earlier reached nearly $3,100. U.S. futures gold rose 3%, settling at $3,079.40. (GOL/HCN)

– London copper prices continued to decline, with Chinese copper prices hitting an eight-month low as buying interest waned. This followed China's countermeasures against the U.S. tariff increases, intensifying the trade war between the two major economies. At 1615 GMT, the three-month benchmark copper on the London Metal Exchange (LME) was reported at $8,631 per ton, down 0.3%. (MET/LCN)

(Today's Highlights)

Important Economic Data (GMT Time):

– Japan's March bank lending balance, March corporate goods price index (CGPI) (9th 2350)

– China's March CPI/PPI (around 0130)

– Taiwan's March trade balance (around 0800)

– U.S. March Consumer Price Index (CPI), weekly initial jobless claims (around 1230)

– U.S. March federal budget (1800)

Major Economic Events and Official Speeches (GMT Time):

– Spanish Prime Minister Sanchez visits China (until the 11th)

– ASEAN trade ministers hold an online meeting to discuss U.S. tariff issues (0130)

– Swedish Central Bank Vice President Sem discusses current monetary policy and economic conditions (0700)

– Reserve Bank of Australia Governor Lowe delivers a speech (1000)

– Eurofi high-level seminar on European financial regulation

– Chair of the European Central Bank's Banking Supervision Committee, Enria, delivers a speech (1200)

– Richmond Fed President Barkin gives a speech titled "Navigating the Economic Fog" and answers questions (1230)

– Bank of England Deputy Governor Broadbent speaks on "The Outlook for the UK Economy and Financial Stability" (1300)

– Dallas Fed President Logan delivers remarks at the North American Trade and Immigration Outlook event hosted by the bank (1330)

– Kansas City Fed President George speaks on economic outlook and monetary policy (1400)

– Philadelphia Fed President Harker delivers a speech on "Financial Technology" (1600)

– Chicago Fed President Goolsbee participates in a Q&A session hosted by the New York Economic Club (1600)

Note: For other important financial news, please click (TOP-CMN); for recent "Reuters Morning Report," please click (NN/CN)