U.S. stock markets rallied sharply Tuesday following President Donald Trump's announcement to delay imposing 50% tariffs on European Union goods until July 9, a move prompted by a request from European Commission President Ursula von der Leyen.
This tariff delay helped reverse recent market declines and contributed to a surge in consumer confidence, which hit a
three-month high in May, according to the Conference Board. The consumer confidence index rose more than expected, signaling improved sentiment among Americans after five months of decline.
Trump's tariff policy has been characterized by volatility, with markets typically reacting negatively to tariff announcements and positively when tariffs are scaled back. This pattern has been dubbed the "TACO trade" ("Trump Always Chickens Out") by Financial Times columnist Robert Armstrong, reflecting investor behavior capitalizing on the president's tariff whiplash.
"When the president makes a tariff announcement, markets tank, and when he scales tariffs back, markets soar," one report noted.
Despite criticism, Trump denied backing down, asserting his moves have strengthened the U.S. position in trade negotiations. The administration's trade war with China followed a similar pattern, with tariffs initially as high as 145% now reduced to 10% after a deal.
The tariff delay and rising consumer confidence have boosted Wall Street optimism, with the S&P 500 snapping a four-session losing streak and rallying over 2%. More than 90% of S&P 500 companies have reported quarterly results, with 77% beating estimates, the highest since Q2 2024.
"The rating was stronger than expected, in part due to Trump walking back on some of his most [tariff threats]," analysts said, highlighting the market's positive response to easing trade tensions.
The 10-year Treasury note yield fell 8 basis points to 4.43%, reflecting investor confidence amid the tariff news and economic data.
Overall, the tariff delay has temporarily eased trade war fears, bolstered consumer sentiment, and sparked a notable rally in U.S. equities.
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U.S. stocks surged Tuesday after President Trump delayed imposing 50% tariffs on European Union goods until July 9, following a request from the EU. Consumer confidence hit a three-month high in May, buoyed by the tariff delay and easing trade tensions, lifting market sentiment and investor optimism.
