Financial markets have cautiously welcomed reports that the Trump administration plans to backtrack on elements of its threatened trade war escalation.

Various US news organizations, including Bloomberg and the Wall Street Journal, reported over the weekend that sector-wise tariffs set to take effect on 2 April will likely be scrapped.

should tariffs indeed be averted, it would mean goods such as cars, semiconductors, and pharmaceutical products would escape the 25% tariff hike.

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Bloomberg News first shared these developments in response to vigorous lobbying by affected industries.

The Wall Street Journal, citing an anonymous Trump administration official, also confirmed that the threatened customs charges could be dropped for the time being.

Yet, it added that so-called “reciprocal” tariffs, scheduled as retaliation to duties imposed on American goods to this point, are still set to proceed on 2 April.

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The administration’s strategy may focus on countries or trading blocs with significant trade imbalances with the United States.

As of now, the White House has not issued an official response.

These remarks were greeted with optimism on financial markets, bolstered by earlier statements by US Treasury Secretary Scott Bessent suggesting a potential delay for the retaliatory tariffs as negotiations continue.

Negotiations with China continue, and the European Union has hinted it may delay its own counter-tariffs on American steel and aluminum.

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Markets are clinging to any signs of a potential easing in tensions.

In recent weeks, US stocks and the dollar have weakened amid concerns that the trade dispute might lead to recession.

UK economic indicators have already shown signs of strain following the introduction of metal tariffs earlier this month.

Data from S&P Global indicated a significant decline in manufacturing export sales in March and the sharpest drop in production volumes in almost a year-and-a-half.

Monday saw a rebound in stock markets globally, with US futures suggesting a positive start to the day on news of the trade talks.

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European markets have also shown gains; the FTSE 100 was up 0.5% in early trading, mirrored by similar increases in Germany’s DAX.

Russ Mould, investment director at AJ Bell, said, “An uncertain outlook for many countries is economically troubling and challenges investors trying to position their portfolios. The constant shifts may leave markets feeling disoriented.

“This year is shaping up to be one of economic slowdown. Businesses are likely to pause investments until they get clarity, and consumers remain cautious about their spending. We could, however, be on the cusp of some key information.

“Trump has announced 2 April as ‘Liberation Day’ for the US, a day when he plans to unveil retaliatory tariffs against countries deemed to have been unfavourable in trade. Markets have not braced themselves for the worst, though. Instead, there is talk that ‘Liberation Day’ might not be as severe as initially expected.”