Trump sought a victory lap at a White House cabinet meeting, saying the European Union had backed off from imposing retaliatory tariffs because of his tough stance on China.
Trump acknowledged “a transition cost and transition problems,“ but dismissed global market turmoil. “In the end it’s going to be a beautiful thing.”
But major indices spent the entire day in the red, with the broad-based S&P 500 finishing down 3.5 percent after soaring 9.5 percent on Wednesday.
Oil and the dollar also slid on fears of a global slowdown in economic activity, while safe-haven asset gold hit a new record.
The dialing back of the planned global trade war left most of the focus on China, the world's number two economy after the United States.
This was because the latest tariff hike comes on top of a 20 percent tariff already imposed earlier. China has retaliated with levies of 84 percent on US imports.
Trump says he wants to use tariffs to reorder the world economy by forcing manufacturers to base themselves in the United States and for other countries to decrease barriers to US goods.
Amid questions over how far Trump is ready to push, the European Union welcomed the US president's partial row-back on his original threat to impose 20 percent tariffs against the bloc.
“We want to give negotiations a chance,“ EU chief Ursula von der Leyen said in a statement.
Trump likewise warned that the partial thaw could return to deep freeze after a 90-day truce period.
Canadian Prime Minister Mark Carney called Trump's reversal a “welcome reprieve” and said Ottawa would begin negotiations with Washington on a new economic deal after elections on April 28.
In its latest measure, Beijing announced it would reduce the number of Hollywood films imported, but said it remained ready for dialogue.
Trump brushed off Beijing's clampdown on US films, saying, “I think I’ve heard of worse things.”
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