The ASX share market has surged today in response to a positive tariff development in the US. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) is up 4.6%.
Overnight, the Nasdaq Composite Index (NASDAQ: .IXIC) climbed 12%, and the S&P 500 Index (SP: .INX) jumped 9.5%. This came after Trump decided to move (nearly) all countries to a 10% tariff rate during a 90-day period as the US negotiates with each country individually.
Investors have been clearly elated by the backtrack, as it may mean less damage to the global economy.
Following the stock market's huge rally, some investors may feel as though they've missed their chance to invest at low prices. But, it may not be too late to invest for a few reasons.
The first two points I'm going to make are related to the ongoing tariff situation.
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Global tariffs are still in place
Investors in the ASX share market (and global stock market) are clearly feeling more positive. However, the tariff situation is still in flux. Products going into the US (excluding China) are still receiving a 10% tariff. That's a big increase and still implies inflation for those items.
Plenty of share prices are lower than they were on 2 April 2025 (Australian time), and most valuations are lower than they were in mid-February. Aussie investors can still buy ASX shares at a good price.
Plus, the 90-day pause is supposedly just a pause unless something can be agreed. There could still be further volatility in the months ahead for ASX shares.
Chinese tariffs are even higher
Trump has ratcheted the tariff on Chinese goods to 125% "effective immediately". A souring of the economic relationship between the US and China could still lead to inflation in the US and a negative impact on both countries (as well as Australia, which exports a lot to China).
If China responds to Trump's latest tariff hike with another tariff increase, what will happen to trade between those two countries?
I'm not here to make predictions about what could happen next, but the next step is not guaranteed to be positive.
Be optimistic about ASX share opportunities in the long term
Regardless of what happens with tariffs in the short term, I think it's a good thing to be optimistic for the long term. By staying positive during the sell-off, some investors may have been able to snap up opportunities.
Over the long term, business profits have continued to grow, helping their share prices rise. I think this is the most important thing Aussies should focus on.
Every so often, share prices have dropped heavily, and this will probably happen again. It could be this year, next year, or later this decade. But it happens often enough that we should expect volatility to happen. Whenever the next market correction occurs, I'll be looking to buy.
