President Donald Trump’s decision to temporarily halt proposed tariffs on Mexico and Canada has led to a significant rally in Asia-Pacific markets on Tuesday. The move has boosted investor sentiment across the region, with major indices experiencing gains. In Japan, the benchmark Nikkei 225 advanced 0.72% to close at 38,798.37, while the broader Topix index gained 0.65% to 2,738.02.
South Korea’s KOSPI index rose 1.13% to end the day at 2,481.69, with the small-cap Kosdaq climbing 2.29% to 719.92. Australia’s ASX 200 closed flat at 8,374 after erasing earlier gains, and in India, the NSE Nifty 50 increased by 1.19%, and the BSE Sensex index was up 1.12%. The positive trend in Asia-Pacific trades contrasts with the performance in U.S. markets, where major indices closed lower on Monday due to concerns over the tariff situation.
The Dow Jones Industrial Average fell 122.75 points, or 0.28%, to 44,421.91, while the S&P 500 and the Nasdaq Composite also declined, down 0.76% and 1.2% respectively. Shares of Japanese automakers saw gains, with Honda rising 1.79%, Toyota adding 2.81%, and Nissan increasing by 1.91%. However, Mazda Motor slid 7.5% following the release of disappointing financial results.
trump’s tariff pause impacts markets
Mitsubishi Motors experienced a significant decline, with shares plunging as much as 15.25% after the company slashed its full-year profit forecasts due to expected lower sales volumes in several regions and higher operating expenses. In the private equity sector, U.S. fund KKR raised its tender offer for Fuji Soft by 4.2% to 9,850 yen ($63.45) per share, competing with Bain Capital’s bid of 9,600 yen per share.
Following this news, shares in Fuji Soft rose by 1.59%. China’s DeepSeek has entered the spotlight by unveiling advanced AI models developed at a remarkably low cost of $6 million, sparking interest across various industries globally as the company has decided to release this technology publicly. Economists warn that if the tariff plans are fully implemented, they could hinder economic growth and spike inflation.
Morgan Stanley’s estimates predict U.S. inflation may increase by 0.3 to 0.6 percentage points over the next few months, potentially raising headline PCE inflation to 2.9% to 3.2%. Additionally, real GDP growth could drop by 0.7 to 1.1 percentage points, putting it between 1.2% to 1.6%. The 30-day delay in U.S. tariffs was secured in exchange for Canada and Mexico toughening their borders to stem the flow of drugs and unauthorized migrants into the United States.
This development highlights the different leadership styles of Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum, as well as the distinct relationships each country has with the United States.
