Global financial markets are giving a cautious welcome to reports the Trump administration is to row back on elements of its threatened trade war escalation.

Separate US news organisations said over the weekend that sector-specific tariffs, which the president had warned would come into effect on 2 April, were now unlikely.

If true, it would mean tariffs of up to 25% on cars, semiconductors and pharmaceutical goods would not take effect.

Money latest: Supermarket ‘price war’ heats up

Bloomberg News was first to report the development, which followed fierce lobbying from the industries concerned.

The Wall Street Journal, citing a Trump administration official, also reported the threatened import charges were to be withdrawn, at least for a further temporary period.

They added, however, that so-called “reciprocal” tariffs in response to duties imposed on US goods to date were still planned for 2 April.

There is speculation tariffs could be narrowed to target the countries, or blocs, with the greatest trade imbalances with the United States.

The White House has yet to comment officially.

But the remarks were seen as further hope of a climbdown by financial markets, as they built on earlier comments by US Treasury Secretary Scott Bessent that indicated a possible delay to the reciprocal element as details continued to be ironed out.

Further US talks with China are planned, while the European Union said last week it may delay implementing its threatened response to US steel and aluminium tariffs.

Any signs for optimism are being seized upon by investors.

US stocks and the dollar have suffered particularly in recent weeks amid fears the trade war could spark recession in the world’s largest economy and inflict hefty economic damage elsewhere.

The latest economic indicators suggested harm for the UK already after the universal tariffs on metals came into effect earlier this month.

Data from S&P Global showed weak international demand resulted in the fastest decline in manufacturing export sales since August 2023 during March – and the steepest downturn in production volumes for almost one-and-a-half years.

Stock markets were up across the board on Monday and US futures pointed to a positive open on the back of the reported climbdown.

Read more:
Trump trade war expands with 25% tariffs on all steel and aluminium imports
How tariffs are wreaking havoc in UK metals industry

In Europe, the FTSE 100 rose by 0.5% in early deals, while there were similar gains for the DAX in Germany.

Russ Mould, investment director at AJ Bell, said of the market mood: “An uncertain outlook for many countries is problematic from an economic perspective and it’s bad for investors who are struggling to know how they should position portfolios. Constant chopping and changing could result in financial markets feeling like they’ve got seasickness.

“2025 is fast becoming the year of the economic slowdown. There is a high chance that businesses pause investment until they know the lay of the land and consumers continue to be cautious with their spending. Fortunately, more information could be just around the corner.

“Trump says 2 April will be ‘Liberation Day’ for the US, whereby he will unveil reciprocal tariffs on countries deemed to be giving the US a bad deal on trade. Interestingly, markets haven’t braced themselves for the worst on this news. Instead, there is chatter that Liberation Day might not be so punishing as previously thought.”