U.S. stocks slipped in early trading on Thursday as investors assessed the economic impact of the trade war, a day after President Trump abruptly backed down on some of his punishing global levies. The European Union announced it would pause its retaliatory tariffs on U.S. imports for 90 days, but tensions between China and the United States showed no signs of abating as Mr. Trump left in place his steep tariffs aimed at Beijing.
Indexes in Europe and Asia rose on Thursday, after the S&P 500 rallied the day before to its biggest daily gain since 2008.
Mr. Trump has left in place a base tariff of 10 percent on virtually all imports, as well as levies on autos, steel and aluminum. And his turnabout did not temper the greater concerns of economists who cautioned that the full repercussions from the trade tensions between Washington and Beijing would not be felt for weeks.
U.S. inflation eased more than expected in March, providing what economists say is likely to be only a temporary reprieve before Mr. Trump’s tariffs are expected to reignite price pressures. The Consumer Price Index climbed 2.4 percent last month from a year earlier, with prices dropping 0.1 percent over the course of the month. That data encompassed a period before the majority of Mr. Trump’s tariffs — including the most recent ones on China — went into effect. And despite the reprieve for some nations, economists have been warning that the tariffs now in place will still prove costly, not only leading to slower growth but also higher inflation.
Here’s what else to know:
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U.S.-China tensions: Mr. Trump ratcheted up taxes on Chinese goods to 125 percent, his third such increase in a week, after Beijing raised tariffs on U.S. imports to 84 percent, escalating the conflict between the world’s two largest economies. Mr. Trump suggested on Wednesday that he was waiting to hear from China’s leader, Xi Jinping, so the two could broker a deal. China has said it is willing to hold talks, but not under duress. “China wants to make a deal,” Mr. Trump said. “They just don’t know quite how to go about it.”
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E.U. pause: Mr. Trump’s reversal prompted the European Union to put its new tariffs on hold in order “to give negotiations a chance,” said Ursula von der Leyen, president of the European Commission, though she warned that the tariffs would take effect if talks “are not satisfactory.”
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Relief rally: Stocks in Asia and Europe followed the lead of U.S. markets and rallied on Thursday. The biggest winners were Taiwan and Japan, each up over 9 percent.
