Markets rebound on hopes for tariff relief and government spending plans

Theron Mohamed,Katherine Li,Huileng Tan

Wed, Mar 5, 2025, 6:01 PM 5 min read

• Global markets rallied Wednesday on hopes for tariff relief and governments pledging economic support.

• Donald Trump imposed 25% tariffs on Canada and Mexico after pausing the plan for a month.

• Commerce Secretary Howard Lutnick said tariff compromises with both countries could come on Wednesday.

US stocks rebounded Wednesday on hopes that President Donald Trump's latest tariffs would prove short-lived, while European and Asian markets rallied as the Chinese and German governments signaled fresh support for their economies.

As of 9:50 a.m. ET, the S&P 500 was up 0.2%, the Dow Jones Industrial Average was up 0.3%, and the Nasdaq Composite was up 0.1%.

European stock markets were a sea of green with Germany's DAX rallying 3.2%, and both France's CAC 40 and the Euro Stoxx 50 gaining 1.6%.

Hong Kong's Hang Seng Index closed 2.8% higher, while mainland China's CSI 300 closed 0.3% up, and the Hang Seng Tech Index gained 4%. Japan's Nikkei 225 ended 0.2% higher, and South Korea's Kospi index closed 1.2% up.

After pausing his contentious plan for a month, Trump reimposed 25% tariffs on imports from Canada and Mexico on Tuesday. Trump has said the tariffs are intended to compel America's neighbors to stem the flow of drugs and crime into the US.

Commerce Secretary Howard Lutnick told Fox Business that Trump could announce tariff compromises with Canada and Mexico as early as Wednesday.

He made the comments after US markets staggered and closed lower for a second consecutive session on Tuesday. The S&P 500 fell 1.2%, wiping out all its gains since November's presidential election, and the Nasdaq Composite flirted with a 10% decline from its most recent closing high before closing 0.4% lower.

Lutnick said talks with Canada would most likely reduce some of the newly reimposed tariffs on imports from the two neighboring countries.

"Both the Mexicans and the Canadians are on the phone with me all day today, trying to show that they'll do better," he said, adding that Trump was "listening" and open to a middle-ground solution.

Canada swiftly responded with 25% retaliatory tariffs. Ontario Premier Doug Ford said he'd cancel a $100 million deal with Starlink and remove US alcohol from shelves. He also threatened a 25% surcharge on electricity that Ontario sends to 1.5 million Americans.

Mexican President Claudia Sheinbaum meanwhile said retaliatory measures were "going to wait" because she planned to speak to Trump this week.

While details of Trump's compromise remain unclear, Lutnick said it probably wouldn't be another tariff pause, but a more long-term deal.