The US President has done the greatest U-turn or pivot in the history of financial markets and American history, and the positive impact on financial markets is the biggest I’ve seen in a lifetime of reporting on money matters to the Australian public!

Love them or hate them, it was the reactions of financial markets (stocks and bonds) that has taught Donald J. Trump a powerful lesson. And God I’m glad he was smart enough to heed the market’s unignorable messaging.

In case you need to have it spelt out, Donald Trump got smart and has backed off on his huge tariffs, and stocks have surged. The Nasdaq was up over 12% and the Dow spiked nearly 8%, while our market is set to open 420 points or 5.73% higher, which is huge. The dollar has picked up to 61.40 US cents and is bound to trend higher despite this already big 3.25% gain.

While our gains will be good, our link to China could reduce the total gains, so let’s see what the

new status of tariffs is in the wild weird world of Donald Trump.

Here’s the new tariff world in a nutshell:

1. There’ll be a 90-day pause in some reciprocal tariffs.
2. All countries except China go back to a 10% baseline tariff.
3. China would now face a higher 125% tariff.
4. The pause doesn’t change sector tariffs on the likes of cars, steel, aluminium, etc.

So, what changed the President’s mind to create the greatest policy pivot of all time? Try these things:

1. The EU decided to start collecting tariff duties on US products as of April 15.
2. Jamie Dimon, boss of JPMorgan, went on TV (the preferred medium of Donald Trump) and said the chances of a recession had escalated.
3. The bond market vigilantes and sensible traders started pulling money out of US government bonds, which meant interest rates were on the rise. We’re talking about a potential liquidity crisis if this continued!
4. Scott Bessent, his Treasury Secretary, says “this was his strategy all along.”
5. Elon Musk calling Trump’s key trade adviser, Peter Navarro, “a moron”.
6. Bill Ackman talking about the President creating a “nuclear winter”.
7. Ordinary Americans were staggered that their ‘super’ or 401K balances were tumbling.

What does this all mean?

1. Your super balances will surge today with the stock market.
2. The recession fear is off the table.
3. China and Trump will look at making ‘a deal’ but I expect the game of chicken to see who blinks first will be the near-term big story.
4. Deals will eventually be made with most countries and those with a big trade surplus with the US will be at the negotiation table first.
5. We could be exempted from the 10% baseline tariff because we have a trade deficit with the US.
6. Steel, aluminium and beef tariffs or sector tariffs probably will remain.

The bottom line is that the collapse of the stock market would have motivated Elon Musk to bag the President’s key trade adviser, Peter Navarro. Tesla’s share price was up 22.29% overnight. And it was the bond market that would have scared the President into this prodigious policy pivot.

On his U-turn, the President said people had the “yips”, which is a golfing term when a player has anxiety, especially when it comes to putting.

Of course, no politician could explain his way out of the greatest policy mistake in 95 years for the USA, but the most important development overnight is that this tariff madness has been replaced by a more sensible approach for the US to get a better deal on trade protection.

And, hell, financial markets liked it. And today, we all get richer!