The Dow Jones has posted a 700-point turnaround to finish 1 per cent higher, after earlier experiencing steep losses.
China's warning of new tariffs against the US amid escalating trade tensions initially sparked fear and saw US markets plunge at the start of trade.
The Dow Jones fell more than 500 points early in the session but staged a big fightback to close 230 points higher.
Shares in Apple were hit following the tariff announcement, before recovering to finish up by 1.9 per cent.
Manufacturing firms also fell, including plane maker Boeing. In a statement, Boeing said it was confident a dialogue continues between the US and Chinese governments on the proposed tariffs.
"While both governments have outlined positions that could do harm to the global aerospace industry, neither has yet imposed these drastic measures," Boeing said.
Eurozone unemployment at decade low
In Europe, markets in Frankfurt and Paris closed lower, while London's FTSE edged marginally higher.
Data showed inflation picked up across the Eurozone in March, the first lift in several months.
Consumer prices rose 1.4 per cent in the year to March, remaining below the European Central Bank's 2 per cent target.
Meanwhile, Eurozone unemployment fell to its lowest level in a decade.
Australia's trade surplus tipped to narrow
Following Wall Street's comeback, Australian futures are pointing to a positive start to trade for the local market.
On the economic front, the ABS will release trade figures for February.
Economists polled by Reuters are forecasting the trade surplus to narrow to $700 million after coming in at more than $1 billion in January.
However, NAB is expecting a modest increase to a surplus of $1.4 billion.
"Imports are expected to soften a little further from the December spike, while exports should rise on the back of the ongoing pick up in LNG exports, and moderate increases in coal and iron ore," NAB wrote in a note.
The previous month saw a surprising surge in gold exports, which NAB is tipping to be reversed somewhat in the figures to be released later today.
