Stock Market Plunges After Trump Announces Reversal of Tariffs, Sparking Downturn in S&P 500 Futures

U.S. stock futures dipped slightly on Thursday, a day after the S&P 500 recorded one of its most substantial rallies in decades, triggered by former President Donald Trump's unexpected announcement of a halt in planned global tariffs, excluding China.

The S&P 500 futures dropped around 0.3% in early trading, suggesting a potential pullback from Wednesday's explosive gains. The S&P 500 index soared more than 9% on Wednesday, marking its third-largest one-day percentage gain since World War II, fueled by investor optimism over the tariff pause.

While the historic stock market rally was a positive surprise for many investors, the moderate decline in futures indicates a tempering of enthusiasm as markets grapple with the fine details of the policy shift.

Trump's decision to postpone the imposition of tariffs on imports from most U.S. trading partners, except China, sparked the rally. In retaliation, China increased tariffs on a broad range of U.S. exports to 84%, reigniting worries of a prolonged U.S.-China trade war and added strain on global supply chains.

Initially, investors saw the temporary tariff suspension as a sign of potential de-escalation in trade tensions, especially with the European Union and key U.S. allies. This triggered a purchasing wave across all sectors, from tech stocks to industrials and consumer goods.

However, market strategists caution that Wall Street volatility is likely to persist as long as uncertainties surrounding U.S.-China trade relations persist. "Yesterday's rebound was emotional and headline-driven," said Marcy Thompson, chief equity strategist at Meridian Global. "Today's dip in S&P 500 futures reflects a more rational reflection of lingering risks."

Beyond trade, investors are also attentive to upcoming inflation data and comments from the Federal Reserve for insights into future monetary policy. The confluence of elevated inflation, volatile commodity prices, and rising geopolitical tensions continues to complicate the economic outlook.

With Trump's trade policy once again taking center stage, markets will closely monitor further developments. Thursday's futures decline is a sign that despite temporary euphoria, uncertainty continues to shape investor sentiment.

Additional reporting reveals that the U.S. and China issued a joint statement from their economic and trade meeting in Geneva in May 2025, marking a move toward mutual opening, continued conversation, and cooperation. China agreed to suspend a significant portion of its additional tariffs on U.S. goods for an initial 90-day period while maintaining a 10% tariff. The U.S. corresponds with a reciprocal reduction in tariffs on Chinese goods, bringing down rates from combined levels as high as 145% to about 30%. This agreement sets up a mechanism for ongoing discussions between U.S. and Chinese officials to address broader economic and trade relations, signaling a potential path toward more sustainable bilateral trade policies. The easing of tariffs in May 2025 represents a positive but cautious step toward stabilizing U.S.-China trade relations, contributing to a reduction in immediate trade-related stock market volatility, but the incomplete and temporary nature of the deal, alongside ongoing geopolitical tensions, means volatility remains somewhat elevated compared to pre-trade-war levels.

The S&P 500 futures decline suggests a tempering of enthusiasm after the surge in trading on Wednesday, driven by Trump's decision to halt global tariffs, excluding China.
The temporary tariff suspension was initially seen as a sign of potential de-escalation in trade tensions, especially with the European Union and key U.S. allies.
Beyond trade, investors are also attentive to upcoming inflation data, comments from the Federal Reserve, and global political news, as these factors continue to complicate the economic outlook.
The joint statement issued in May 2025 by the U.S. and China marks a move toward mutual opening, continued conversation, and cooperation, with both sides agreeing to suspend a significant portion of their additional tariffs for an initial 90-day period.
The easing of tariffs in May 2025 represents a positive but cautious step toward stabilizing U.S.-China trade relations, contributing to a reduction in immediate trade-related stock market volatility.
However, the incomplete and temporary nature of the deal, alongside ongoing geopolitical tensions, means volatility remains somewhat elevated compared to pre-trade-war levels.
As the trade policy between the U.S. and China continues to evolve, markets will closely monitor further developments in global logistics, exports, imports, supply chain, finance, business, politics, and general news, including crime and justice.