The European Union will pause its countermeasures against US tariffs after President Donald Trump temporarily lowered the hefty duties he had imposed on dozens of countries, European Commission chief Ursula von der Leyen says.

The bloc was due to launch counter-tariffs on about 21 billion euros ($A37.59 billion) of US imports from next Tuesday in response to Trump’s 25 per cent tariffs on steel and aluminium. It is still assessing how to respond to US car tariffs and the broader 10 per cent levies still in place.

“We want to give negotiations a chance,” von der Leyen said on X.

“While finalising the adoption of the EU countermeasures that saw strong support from our Member States, we will put them on hold for 90 days.”

Von der Leyen reaffirmed an offer for a “zero-for-zero” tariff agreement for all industrial goods between the EU and the US.

Trump’s stunning decision brought relief to battered global markets and anxious European leaders, even as he ratcheted up a trade war with China.

Trump’s turnabout, which came less than 24 hours after steep new tariffs kicked in on most trading partners, followed the most intense episode of financial market volatility since the early days of the COVID-19 pandemic.

US stock indexes shot higher on the news, and the relief continued into Asian and European trading on Thursday.

The pan-European STOXX 600 jumped 5.4 per cent in trading on Thursday, after losing 12.5 per cent since the tariffs took effect on April 2. Trade-sensitive Germany’s DAX index rose 5.6 per cent.

Before Trump’s U-turn, the upheaval had erased trillions of dollars from stock markets and led to an unsettling surge in US government bond yields that appeared to catch the US president’s attention.

“I thought that people were jumping a little bit out of line, they were getting yippy, you know,” Trump told reporters after the announcement, referring to the jitters sportspeople sometimes get.

Trump kept the pressure on China, the world’s No.2 economy and second-biggest provider of US imports with an increase of tariffs on Chinese imports to 125 per cent from the 104 per cent level that kicked in on Wednesday.

China will “follow through to the end” if the US insists on its own way, Commerce Ministry spokesperson He Yongqian told a regular press briefing. China’s door was open to dialogue, but this must be based on mutual respect, the ministry said.

“The US cause doesn’t win the support of the people and will end in failure,” China’s Foreign Ministry spokesperson Lin Jian said.

Beijing may again respond in kind after imposing 84 per cent tariffs on US imports on Wednesday to match Trump’s earlier tariff salvo.

“We don’t back down,” Mao Ning, another Foreign Ministry spokesperson, posted earlier on X on Thursday, sharing a video of a defiant speech by late Chinese leader Mao Zedong from 1953 during its war with the United States on the Korean peninsula.

The Korean War ended in a stalemate later that year.

Trump said a resolution with China on trade is also possible. But officials have said they will prioritise talks with other countries as Vietnam, Japan, South Korea and others line up to try and strike a bargain.

“China wants to make a deal,” Trump said. “They just don’t know how quite to go about it.”

Goldman Sachs revised down its forecasts for China’s GDP growth to four per cent in 2025, from previous projections of 4.5 per cent, citing the negative effects of tariffs.

US Treasury Secretary Scott Bessent asserted the 90-day freeze on Trump’s “reciprocal tariffs” had been the plan all along to bring countries to the table. Trump, though, later indicated that the near-panic in markets that had unfolded since his April 2 announcements had factored into his thinking.

Trump’s reversal on the tariffs imposed on other countries is also not absolute. A 10 per cent blanket duty on almost all US imports will remain in effect, the White House said. 

The announcement also does not appear to affect duties on autos, steel and aluminium that are already in place.

Asian stocks rallied on Thursday as US President Donald Trump paused most of his sweeping reciprocal tariffs for 90 days to allow more time for negotiations.

The US dollar weakened, helping metals halt the longest run of losses in 25 years. Gold rose over one per cent to $US3,120 per ounce after posting its biggest one-day gain in 18 months in the wake of abrupt shifts in US tariff policy. Oil resumed losses after rebounding from a four-year low in the previous session.

Japan’s Nikkei enjoyed its biggest daily gain since August 6, while a broader gauge of Asia-Pacific stocks excluding Japan rose 4.4 per cent.

The Nikkei average soared 9.13 per cent to close at 34,609 and the broader Topix index settled 8.09 per cent higher at 2,539.40.

China and Hong Kong shares ended higher as investors pinned their hopes on talks between the world’s two largest economies as well as on market and policy support from state firms.

China’s blue-chip CSI300 Index closed 1.3 per cent higher, while the Shanghai Composite Index rose 1.2 per cent. Hong Kong’s benchmark Hang Seng was up 2.1 per cent.

The rise in Hong Kong shares followed a six per cent surge in Chinese internet companies listed on the US market overnight as Trump escalated tariffs on China to 125 per cent from the 104 per cent level that took effect on Wednesday.

“Even though it’s obvious that the tariffs are targeting China, there is still some room for manoeuvring and negotiations if they can pause tariffs on other countries,” said Jason Chan, senior investment strategist at Bank of East Asia.

“Markets still have some hope that at least some discussions could take place.”

Kai Zhan, international partner at Chinese law firm Yuanda, said announcements overnight showed “Trump is using tariffs as a negotiation tactic rather than acting irrationally.”

Zhan said the market was also expecting that the White House’s temporary tariff exemptions for other countries provided China with opportunities to reroute its exports.

The onshore yuan fell to its weakest level since December 2007 at 7.3518 per dollar.

Prior to market opening, the People’s Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a two per cent band, at its lowest level since September 11, 2023.

A steep selloff in US bonds this week also showed some signs of easing on Thursday.

The benchmark 10-year Treasury yield dropped 10 basis points (bps) to 4.2985 per cent, having touched a high of 4.5150 per cent in the previous session.

A violent US Treasury selloff in the previous sessions, evoking the COVID-era “dash for cash”, had reignited fears of fragility in the world’s biggest bond market.

“It makes sense to apply some uncertainty discount on US risk assets,” said Forvis Mazars’s Lagarias.

German Bunds, which had acted as the lone safe haven in the bond markets, sold off on Thursday. The 10-year yield was up 8 bps at 2.659 per cent while the two-year rose 14 bps to 1.855 per cent.

Elsewhere, oil prices fell as investors fretted about the continued growth shock from the worsening Sino-US trade war. Brent crude futures were down 2.3 per cent at $US63.97 per barrel, while US crude fell 2.2 per cent to $US60.95.

Spot gold extended its climb and was last up 0.9 per cent at $US3,109 an ounce.

with DPA

US President Donald Trump’s stunning decision to pause most of the hefty duties he had just imposed on dozens of countries brought relief to battered global markets and anxious European leaders, even as he ratcheted up a trade war with China.

Trump’s turnabout, which came less than 24 hours after steep new tariffs kicked in on most trading partners, followed the most intense episode of financial market volatility since the early days of the COVID-19 pandemic.

US stock indexes shot higher on the news, and the relief continued into Asian and European trading on Thursday.

The pan-European STOXX 600 jumped 5.9 per cent in early trading on Thursday, after losing 12.5 per cent since the tariffs took effect on April 2. Trade-sensitive Germany’s DAX index rose 6.7 per cent.

Before Trump’s U-turn, the upheaval had erased trillions of dollars from stock markets and led to an unsettling surge in US government bond yields that appeared to catch the US president’s attention.

“I thought that people were jumping a little bit out of line, they were getting yippy, you know,” Trump told reporters after the announcement, referring to the jitters sportspeople sometimes get.

But while European Commission chief President Ursula von der Leyen and other European leaders welcomed Trump’s latest move and said they hoped for constructive negotiations, China rejected what it called threats and blackmail from Washington.

Trump kept the pressure on China, the world’s No.2 economy and second-biggest provider of US imports with an increase of tariffs on Chinese imports to 125 per cent from the 104 per cent level that kicked in on Wednesday.

China will “follow through to the end” if the US insists on its own way, Commerce Ministry spokesperson He Yongqian told a regular press briefing. China’s door was open to dialogue, but this must be based on mutual respect, the ministry said.

“The US cause doesn’t win the support of the people and will end in failure,” China’s Foreign Ministry spokesperson Lin Jian said.

Beijing may again respond in kind after imposing 84 per cent tariffs on US imports on Wednesday to match Trump’s earlier tariff salvo.

“We don’t back down,” Mao Ning, another Foreign Ministry spokesperson, posted earlier on X on Thursday, sharing a video of a defiant speech by late Chinese leader Mao Zedong from 1953 during its war with the United States on the Korean peninsula.

The Korean War ended in a stalemate later that year.

Trump said a resolution with China on trade is also possible. But officials have said they will prioritise talks with other countries as Vietnam, Japan, South Korea and others line up to try and strike a bargain.

“China wants to make a deal,” Trump said. “They just don’t know how quite to go about it.”

Goldman Sachs revised down its forecasts for China’s GDP growth to four per cent in 2025, from previous projections of 4.5 per cent, citing the negative effects of tariffs.

In Europe, euro zone government bond yields jumped, spreads tightened, and markets scaled back their bets on European Central Bank rate cuts after Trump’s latest announcement.

Trump’s move was an important step towards stabilising the global economy, European Commission President Ursula von der Leyen said.

“Clear, predictable conditions are essential for trade and supply chains to function,” she said in a statement on X.

US Treasury Secretary Scott Bessent asserted the 90-day freeze on Trump’s “reciprocal tariffs” had been the plan all along to bring countries to the table. Trump, though, later indicated that the near-panic in markets that had unfolded since his April 2 announcements had factored into his thinking.

Trump’s reversal on the tariffs imposed on other countries is also not absolute. A 10 per cent blanket duty on almost all US imports will remain in effect, the White House said. The announcement also does not appear to affect duties on autos, steel and aluminium that are already in place.

The Reserve Bank governor has sought to allay concerns following a week of economic tumult brought about by US President Donald Trump’s trade war.

Addressing a women’s economic inclusion event, Michele Bullock conceded she hadn’t intended on speaking about the central bank’s policy imperatives, but needs must.

“Inevitably, there will be a period of uncertainty and adjustment as countries respond to the ongoing tariff announcements by the United States administration,” she told the Chief Executive Women annual dinner on Thursday evening.

“It will take some time to see how all of this plays out and the added unpredictability means we need to be patient as we work through how all of this could affect demand and supply globally.”

Financial markets have been in whipsaw trading since Mr Trump’s initial tariff announcement on April 3, Australian time, with bonds and equities plunging or soaring at each development.

The US president’s latest announcement of a 90-day pause on country-specific tariffs above 10 per cent, with the exception of China, reassured markets across the globe and sent Australian shares soaring more than 4.5 per cent.

The VIX index, which measures market volatility, has spiked up to 60 – the highest level since the early stages of the COVID-19 pandemic.

Volatility was to be expected as the process unfolded, Ms Bullock said, but Australia was in a good position to weather the storm.

“First, we’re not currently seeing the same degree of impact as previous market events like in 2008 for example,” she said

“And second, the Australian financial system is strong and well placed to absorb shocks from abroad.”

Ms Bullock said it was too early for the bank to determine its interest rates response, but the RBA was closely monitoring financial market conditions at home and abroad.

“We are carefully considering several factors including the response of our trading partners, additional counter-responses from the US, the response of our exchange rate and adjustments in other financial markets,” she said. 

“A key focus for us is how all this uncertainty is affecting decisions made by households and businesses in Australia.”

Traders on Wednesday had been pricing in five rate cuts by the end of the year, including the possibility of an emergency 50 basis point reduction at the RBA’s next meeting in May.

Each 25 basis point cut would shave about $90 off monthly repayments on a typical, $600,000 mortgage.

But Mr Trump’s pivot prompted markets to walk back their bets, with just 25 basis points priced in for May and a total of 116 basis points by year’s end.

Deutsche Bank chief economist Phil O’Donaghoe, who 48 hours earlier had predicted a 50 basis point cut for May, reverted his call to his previous prediction of 25 basis points for May.

“That said, our general conviction around the path for lower RBA rates has increased,” he said.

The remaining tariffs of 125 per cent on China and 10 per cent on the rest of the world will still weigh on the RBA’s assessment for global growth, while diversion of goods from the US to Australia would reduce inflation domestically.

NAB went the other way, doubling its forecast for a May cut from 25 to 50 basis points, having revised upwards the near-term unemployment rate while shaving growth expectations for 2025.

The bank’s chief economist Sally Auld and head of Australian economics Gareth Spence said the RBA needed to play catch-up, with the 4.1 per cent cash rate still in restrictive territory.

As New Zealand Prime Minister Chris Luxon rallies regional leaders to discuss a united front to US tariffs, his deputy isn’t quite sure it is needed.

Mr Luxon spent Thursday delivering a speech on the risks to global trade from the US actions, suggesting a collective approach between trading blocs was needed.

“You’ve got 15 per cent of world trade tied up in the (Comprehensive and Progressive Agreement for Trans-Pacific Partnership), there’s a real opportunity for us to co-ordinate and to work together,” he said.

“One possibility is that members of the CPTPP and the European Union work together to champion rules-based trade and make specific commitments on how that support plays out in practice.

“My vision is that includes action to prevent restrictions on exports and efforts to ensure any retaliation is consistent with existing rules.

“Collective action, and a collective commitment, by a large portion of the global economy would be a significant step towards preserving free trade flows and protecting supply chains.”

The CPTPP is a 12-nation trade region including Australia, Canada, Chile, Mexico, Peru, the United Kingdom, New Zealand and several Asian nations.

Mr Luxon said he would spend Thursday afternoon talking to Indo-Pacific leaders and in the evening make calls to Europe, to gauge support for the idea.

However, in an odd twist, Deputy Prime Minister and Foreign Minister Winston Peters said such action would be “very premature”.

“What would you talk about (with other leaders)? What’s the tariff regime going to be in the end? Do we know what that’s going to be? No … What would you actually talk about? Think about it,” Mr Peters said, as reported by The Post.

“I’ve taken the stance that experience matters. In this case, wait until we see what emerges with the tariff war that’s going on.

“It’ll come to a resolution much quicker than people think and as in the last 24 hours, we’ve already seen the beginnings of that so let’s not panic here.”

Mr Luxon has not responded to his deputy’s rebuke.

New Zealand, a trade-reliant nation, was hit with baseline 10 per cent tariffs last week, which Treasury costed at around $NZ900 million ($A828 million) or 0.2 per cent of GDP.

Mr Luxon said that was not his biggest concern from the US action.

“The second order consequences of a region and a world retreating from trade and increasingly uncertain about its economic future will be more significant,” he said.

“For as long as I am prime minister, New Zealand will keep making the case for trade as a cornerstone of our prosperity.”

The EU, which already has a free trade deal with New Zealand, has in the last 24 hours proposed to resume stalled talks with Australia in the aftermath of the Trump tariffs.

Mr Luxon is travelling to Europe at the end of the month in a trip expected to take in bilateral talks with the UK and Anzac Day commemorations in Gallipoli.

An error in Virgin Australia’s booking system has overcharged thousands of flyers, with consumer advocates blaming the lack of competition for travellers being taken for a ride.

About 61,000 travellers will get partial refunds averaging $55 for the error that occurred between April 2020 and March 2025.

The airline said it had policies that determine what additional costs a customer will be charged when they make a change to their itinerary.

“We recently found that in some instances … bookings were repriced in a way that does not align with our policy and we are refunding all impacted guests for that amount,” a Virgin spokesman said.

“We sincerely apologise to those affected guests and have launched (a program) under which all eligible guests are being proactively contacted to process their refunds.”

All those affected will be contacted by Virgin but will need to lodge a claim to receive their refund.

They will have a year to make a claim, with the airline committing to donate any unclaimed money to charity.

But consumer advocate Adam Glezer described the process as laborious and putting the onus back on travellers.

“They (Virgin) should be going out of their way to ensure that the refund process is a seamless exercise for their customers that they have overcharged,” he told AAP.

“This issue should have been noticed, disclosed and rectified a lot earlier.”

Mr Glezer also noted “consumer protection was brittle at best”, with eye-watering prices charged for domestic flights between both major carriers and the crowding out of competitors such as Rex Airlines.

“Having a duopoly in this country is most definitely detrimental to the Australian flying public.”

Virgin has engaged the Australian Competition and Consumer Commission and will work with the watchdog on anything else necessary to make up for the error.

The airline recently sold a 25 per cent stake in its business to Qatar Airways.

The consumer watchdog ticked off a five-year partnership that was set to double flights between Australia and Doha.

Virgin claimed the deal could be worth $3 billion to the national tourism economy across the period.

That approval came more than two years after the federal government rejected Qatar’s application to run an extra 21 weekly flights into Australia, saying the change could cause problems for local carrier Qantas.

South Australia is lining up for a $100 million goal as it welcomes hundreds of thousands of visitors for the biggest AFL event outside of the grand final.

First held in Adelaide in 2023, the state is hosting the annual round until 2026 and hopes to capitalise on its previous success this year with hundreds of associated events and festivals from Bordertown to the Barossa Valley.

Self-described Melbourne “dance dads” David Mallia, Jeremy Foenander, Rowan Lal and Daniel Viola are in Adelaide for their third Gather Round mates’ trip.

The footy break was rapidly becoming a tradition, they said on Thursday as they enjoyed a late lunch at Adelaide Central Market.

They plan to attend three matches, visit the Norwood Food and Wine Festival, the Barossa Valley or McLaren Vale, and “enjoy good food and wine”.     

“It’s a real buzz in Adelaide,” Mr Foenander said.

“It’s easy to get around. It’s just a lot of fun.”

SA Premier Peter Malinauskas said the code’s annual convergence was a win for visiting footy fans and the state’s economy.

“It is truly becoming one of the nation’s bucket-list sporting events,” he said.

The 2024 event delivered the state’s economy a $91.6 million boost and hopes are high this year’s event will top $100 million.

More than $60 million is expected to change hands in the CBD and North Adelaide alone.

Almost 200,000 tickets were sold in two days, with seven of the nine matches already sold out.

Hotel bookings for Thursday, Friday and Saturday were also strong with 94, 89 and 70 per cent occupancy.

Adelaide Airport will welcome almost 200,000 people this week – up 33 per cent on 2024 Gather Round arrivals – easily surpassing the previous record of 182,000 passengers in 2023.

Others are making the pilgrimage by road, with towns on the Dukes Highway staging special events to welcome thousands of visitors from Victoria.

The round features five matches at Adelaide Oval, two at the suburban Norwood Oval and for the first time, two matches in the Barossa Valley at Barossa Park in Lyndoch, which received a $46 million upgrade for the event.

Barossa Mayor Bim Lange said there was “a real buzz in the air” and everything in the region was “well and truly booked out”.

“We’ve got 10,000 people coming for each of the AFL matches on the weekend, we’ve got the SANFL-VFL state game at Tanunda Oval, and there’s 45 other associated events with local wineries and various venues,” he said.

“There’s been no stone left unturned to achieve a really successful carnival and festive atmosphere.”

Australia’s second biggest oil and gas producer has stressed the role of fuels in the energy transition, months after being accused of misleading the public on its net-zero plan.

Santos chief executive Kevin Gallagher talked up the organisation’s performance despite sliding share prices and called for “sensible” policy in the energy transition.

“Because, the world is going to need more energy, not less, and all energy sources will have a role to play,” he told shareholders at the Santos annual general meeting on Thursday. 

Mr Gallagher noted Santos was well positioned to ride out recent volatility in equities and commodities markets, which have contributed to a nearly 30 per cent slide in the group’s shares since July.

“The global uncertainty in capital markets is affecting stocks worldwide, not only Santos,” he said.

“Despite this, Santos’ business continues to perform well and generate strong cash flows with low production costs.”

Mr Gallagher also poured water on rumours of succession planning swirling around the chief executive.

“Despite rumours to the contrary, I am not planning to go anywhere anytime soon,” he said.

“There is still plenty for me to do.”

In a hotly contested meeting, an occasionally exasperated chair Keith Spence defended the ability of Santos to balance new oil and gas projects with its 2040 net-zero plan. 

“I can quote the (International Energy Agency) from March, where (executive director) Faith Birrol stood up and said, ‘We need more developments in oil and gas,” Mr Spence said.

“So I’m past that. Let’s get on with the job of reducing emissions. Thank you.”

The organisation was in court late in 2024 to defend claims its emissions reduction plan, launched in 2020, amounted to misleading or deceptive conduct, a charge Santos has denied.

The group’s controversial Narrabri project – awaiting regulatory and Native Title Tribunal approval – was passionately questioned by Gomoeroi people at the meeting.

“My family and I can no longer practice our spiritual beliefs and our cultural practices within the Pilliga forest due to the ongoing harassment, intimidation and intrusion of our privacy due to Santos security, which includes their live feed video cameras set up all over our forest,” emerging elder Deborah Briggs said.

Traditional owner and registered nurse Michelle Cutmore said mining disrupted sacred sites, waterways and ecosystems that were integral to reciprocal cultural and spiritual practices.

“My ancestors have been here for tens of thousands of years,” she said.

“We are not the problem.”

In response, the Santos chair said the group had engaged with Gomeroi people since they first acquired the project in 2012, with formal negotiations starting in 2015.

“We have good support at the local community level, but there are differences of opinion,” Mr Spence said.

“We are very genuine about our engagement with the Gomeroi people and the difference that we think we can make as a member of your community.”

Mr Gallagher said the company would not take a decision on Narrabri until all approvals and legislative risk surrounding the project had been resolved.

Australia wants absolutely no tariffs applied to its goods and Donald Trump’s policy retreat could provide an opportunity for political leaders to make their case.

The US president has wound back tariffs on imported goods from many countries to 10 per cent for 90 days, while raising the levy applied to China to 125 per cent.

Australia’s tariffs remain the same because it was already subject to a baseline 10 per cent levy.

The latest announcement does not appear to affect the 25 per cent tariffs already placed on all steel and aluminium imports, including those from Australia.

But it does open the door for Australia to reignite negotiations.

“The best deal is zero and that’s what we are continuing to put forward,” Prime Minister Anthony Albanese told reporters in far north Queensland on Thursday.

“The US administration changes its position on a regular basis, and on that fact, we need to make sure that Australia is considered in the way that we go forward.”

Opposition Leader Peter Dutton said Mr Trump’s latest backflip reflected his “volatility”, adding that if he becomes prime minister he will talk to the president about the US-Australia relationship and opportunities for expansion through sectors such as critical minerals.

“I will work with whoever the American president is, I will deal with whatever comes at our country and I’ll make the right decisions and the tough decisions that need to be made to keep us safe and to make sure that we’re a strong economy,” he told reporters in Melbourne.

More than 75 countries have made contact with the US to discuss the trade measures and the 90-day pause will allow Mr Trump to engage in “bespoke” negotiations with these nations, US treasury secretary Scott Bessent said.

Some Australian external territories, including the Heard and McDonald Islands – which have no human inhabitants – and Norfolk Island have also been slapped with tariffs higher than 10 per cent.

“Some of the decisions in our region confounded people who were involved in the negotiations,” Mr Albanese said.

“That is why you have to be an adult, not dial it up to 11 at every opportunity, which is what Peter Dutton’s plan is on everything.”

China and the US have continued to apply escalating reciprocal tariffs and Beijing has asked Australia to “join hands” and respond together, according to reports in the Nine newspapers.

But Deputy Prime Minister Richard Marles said Australia was “not about to make common cause with China”.

With politicians continuing to campaign across the nation ahead of the May 3 election, Nationals leader David Littleproud is spruiking a $20 billion regional Australian future fund to fill gaps in infrastructure, childcare and health services.

The regional fund would be set up with $5 billion in funding sourced from Labor’s program for green energy and transmission line construction, which the coalition plans to scrap.

The remainder of the money would be gathered from budget windfalls from higher commodity prices – which often boosts government coffers – until it adds up to $20 billion.

The coalition has also pledged to set up a second fund, called the future generations fund, which would be used to pay down government debt.

With Mr Dutton keen to position himself as better-placed to negotiate with the US administration, Labor has accused the coalition of copying the president’s initiatives such as the Elon Musk-led Department of Government Efficiency.

In a debate with opposition counterpart Angus Taylor, Treasurer Jim Chalmers said coalition MPs had “hitched their wagon” to American-style slogans and policies.

Opposition senator Jacinta Nampijinpa Price was recently named the coalition spokesperson for government efficiency.

Mr Taylor criticised the government for presiding over a budget that forecast $179 billion of deficits over the next five years and a return to a structural deficit.

Economists and investors are struggling to keep up with Donald Trump’s tariff gymnastics as the latest rethink spurs drastic repricing of rate-cut odds.

The US president overnight announced a 90-day pause on country-specific tariffs above 10 per cent with the exception of China, against which he raised import imposts to 125 per cent amid an escalating trade feud.

The pivot reassured markets across the globe after several days of steep rises and falls, sending Australian equities soaring in their biggest start to a trading session since the volatility of COVID-19.

As a result, central banks might feel less need to employ emergency rate cuts as insurance against an economic slowdown.

Rates markets on Wednesday had been pricing in 35 basis points of cuts at the next Reserve Bank of Australia rates meeting in May, signalling a strong chance of an emergency 50 basis point reduction.

Each 25 basis point cut would shave about $90 off monthly repayments on a typical, $600,000 mortgage.

Traders were pricing in 129 basis points, or at least five standard-sized cuts, by the end of the year.

But Mr Trump’s announcement prompted markets to walk back their bets, with 25 basis points fully priced in for May and a total of 116 basis points by year’s end.

Deutsche Bank chief economist Phil O’Donaghoe, who 48 hours prior had predicted a 50 basis point cut for May, reverted his call to his previous prediction of 25 basis points for May.

“That said, our general conviction around the path for lower RBA rates has increased,” he said.

The remaining tariffs on China and 10 per cent on the rest of the world will still weigh on the RBA’s assessment for global growth, while diversion of goods from the US to Australia would reduce inflation domestically.

NAB went the other way, doubling its forecast for May from 25 to 50 basis points of cutting, having revised upwards the near-term unemployment rate while shaving growth expectations for 2025.

The bank’s chief economist Sally Auld and head of Australian economics Gareth Spence said the RBA needed to play catch-up, with the current 4.1 per cent cash rate still in restrictive territory.

ANZ chief economist Richard Yetsenga said central banks were still likely to inject monetary stimulus into economies, “but emergency plans will be put back on the shelf”.

Only nine days have passed since Reserve Bank governor Michele Bullock last spoke publicly after the central bank’s latest decision to keep interest rates on hold.

But given the developments since, her address to the Chief Executive Women Melbourne annual dinner on Thursday night will be closely scrutinised for any indication as to how the RBA will respond to the carnage.

Ms Bullock met with Treasurer Jim Chalmers and Treasury secretary Steven Kennedy, along with the heads of financial regulators ASIC, APRA and the ACCC, on Wednesday to compare notes over the likely fallout to the Australian economy.

The Council of Financial Regulators, as the gathering is known, noted an increase in global financial market volatility, “but that the Australian financial system was strong and resilient”.

Meanwhile, the government has sought to strengthen trade ties with Asia and the European Union to make up for the expected reduction elsewhere.

Trade Minister Don Farrell met with EU Commissioner for Trade and Economic Security Maros Šefčovič via video-link overnight to resume negotiations for a potential agreement.

Talks broke down in late 2023 due to disputes over market access for agricultural products.

“We are keen to seriously get back to the table, and find a path to progress a deal that would be good for Australia and the EU,” Senator Farrell said.

“We have agreed to talk again soon after the election.”