US markets rise as Trump holds off on tariffs

But some of Trump’s policies such as cuts to government regulations are seen as positive for business.

The Dow Jones Industrial Average ended the day up 1.2%, while the S&P 500 climbed 0.8% and the Nasdaq rose 0.6%.

The dollar, which had fallen on Monday after the inauguration, swung up and down against some other major currencies, including the pound and the euro, as uncertainty lingered about what policies might become reality.

Trump had previously threatened new tariffs on Canada, Mexico and China on day one of his presidency. While they did not materialise on Monday, they are still on the agenda.

“We’re thinking in terms of 25% on Mexico and Canada, because they’re allowing vast numbers of people, Canada’s a very bad abuser also, vast numbers of people to come in, and fentanyl to come in,” Trump said in the Oval Office.

In a presidential memo, he directed federal agencies to investigate why America continues to import more goods than it exports as well as probing potential unfair trade practices and alleged currency manipulation by other countries.

Trump also said new tariffs on China could depend on whether a deal is reached over TikTok’s future. If Beijing blocked such an agreement “it would be somewhat of a hostile act”, he said.

But he said the US is not yet ready to impose tariffs on all imports into the country.

During the election campaign, Trump pledged a universal tariff of 10% and said he would hit China with a 60% import tax.

He has said tariffs will make Americans richer, although critics say the costs are likely to be passed on to consumers.

The president has also said he would create an “External Revenue Service” to collect all tariffs, duties and revenues from foreign sources.

In Europe, London’s FTSE 100 and Paris’s Cac 40 both closed marginally higher.

Danish offshore wind giant Orsted was a big loser, with its shares down as much as 17%, after announcing a $1.7bn (£1.4bn) impairment charge on delays to a US project and after Trump said he would end leasing to wind farms.