DAX back in record territory – everything fine again?
Following Trump's backtracking on tariff policy, the DAX has now reached a new all-time high.
Commerzbank Economic Research
05/16/2025
On 2 April, Donald Trump announced the level of additional tariffs (‘reciprocal tariffs’) he planned to impose – 20% in the case of the EU, for example. The announcements sent shock waves through the financial markets. The S&P 500 fell by almost 5% on 3 April alone. Trump was clearly impressed by this and backtracked. He reduced the additional tariffs to 10% for 90 days. After falling by almost 15% overall, the S&P 500 recovered rapidly. Like the DAX, for example, it is now trading higher than before Trump's announcement at the beginning of April (chart on title page).
Deals with the UK and China boost investor confidence
The financial markets were also buoyed by trade agreements concluded by Trump with the UK and China:
- The agreement with the UK does not change the fact that imports from the UK will be subject to an additional 10% tariff. However, the British will be allowed to export 100,000 cars per year to the US at a tariff rate of 10%, even though a sector-specific tariff of 25% actually applies to car imports into the US. In addition, the US has reduced tariffs on imports of British steel and aluminum from 25% to 0%. Imports of aircraft engines and parts from the UK will be duty-free. As the volume of trade affected by the tariff cuts is small and the imbalance in foreign trade is limited, the agreements cannot be described as a major coup. But it fired the imagination of investors that Trump would continue to back down with other countries.
- The agreement with China reached over the weekend was indeed a positive surprise. The US is reducing the additional tariffs imposed on China for 90 days from 34% to 10%. With the exception of the 20% tariffs imposed in connection with fentanyl allegations, all other general tariffs imposed since Trump took office will be suspended. Overall, US import duties on Chinese goods will fall from 145% to 30%. In return, China will reduce its tariffs on US goods from 125% to 10%. Further details are to be clarified within 90 days.
For full text see attached PDF-Version.
