Stock Markets Rise as Trump Softens Stance on China Tariffs and Keeps Fed Chair

Trump Signals Easing of China Tariffs

The U.S. stock markets rose sharply after former President Donald Trump hinted at lowering the high China tariffs he once imposed. At the height of the trade war, tariffs on Chinese goods reached up to 145%. China responded with its own tariffs of about 125% on U.S. goods. These high tariffs made trade between the two countries difficult and created uncertainty in the markets. Now, Trump said that these China tariffs would “come down substantially.” This change hints at less tension between the U.S. and China and a chance for better trade talks. Trump also used a softer tone when mentioning Chinese President Xi Jinping, suggesting that the two countries might start talking again. This news lifted investor spirits and led to a strong rise in the stock markets.

Despite Trump tariffs, the U.S. needs to rethink trade policies as market dynamics evolve. For a visual timeline and context on the tariff escalations over the years, the following graphic illustrates the key moments in the US-China tariff war:

Timeline of the US-China war on tariffs, showing tariff impositions and retaliations over time.

How the U.S. Stock Markets Reacted

Investors quickly welcomed the news about the likely drop in China tariffs. In just one day, major U.S. stock indexes showed solid gains:

• Dow Jones Industrial Average went up about 1%
• S&P 500 increased 1.66%
• Nasdaq jumped by 2.5%

These rises show how sensitive the markets are to tariffs and trade relations with China. Trump’s statement about lowering China tariffs made investors hopeful that the damaging trade war could slowly end. This hope means better business conditions for companies that depend on trade with China.

Visual breakdown of key U.S. products impacted by Chinese tariffs, highlighting affected industries.

Treasury Secretary Talks Trade Talks

Treasury Secretary Scott Bessent added to the positive mood by saying the government is open to negotiating a big trade deal with China. He pointed out there could be a “big deal” if both sides want to fix trade issues together. The Treasury’s statement suggested talks might cover issues like tariffs, technology sharing, and intellectual property. A deal could include lowering tariffs in stages, thanks to commitments from both the U.S. and China. Fair trade rules might also be part of the agreement.

Stability in Federal Reserve Leadership

At the same time, Trump cleared up earlier talk about firing Federal Reserve Chair Jerome Powell. He said he had “no intention” of removing Powell. This news eased worries about sudden changes in U.S. monetary policy, which could affect interest rates and inflation control. Stable Fed leadership is important for investors. Knowing Powell will stay means less risk of unexpected moves in monetary policy. This certainty helped keep stock markets calm and supported the positive reaction to the tariff news.

China’s Firm Stance on Tariffs

Though the U.S. has softened its approach, China remains firm. Chinese officials say there are no ongoing tariff talks with the U.S. unless all U.S. tariffs get rolled back first. Beijing wants the U.S. to drop all its tariffs before serious talks can begin. China is also making moves to defend its interests. It has raised tariffs on some U.S. products, limited exports of rare earth metals important for tech, and filed complaints with the World Trade Organization. These firm steps show that China does not want to give in easily.

China announced significant tariff hikes in retaliation to U.S. tariff policies. To understand the latest official stance from China, this Bloomberg Television video provides important insight into China’s comments on the ongoing tariff situation and trade talks:

Watch: China Says US Should Not Mislead Public on Trade Talks
Analysis of China’s position on potential tariff suspensions amid U.S. claims of progress, revealing Beijing’s insistence on full tariff removal before negotiations.

Similarly, the evolving rhetoric from Trump amid market reactions is captured in this recent video:

Watch: Trump claims U.S. making tariffs progress, China denies…
Coverage of Trump’s shifting statements on tariff reduction, contrasting with China’s denials and White House demands for reciprocal concessions.

Key Points to Remember

• Trump plans to lower high China tariffs, moving away from his tough earlier approach.
• U.S. stock markets rose sharply as investors grew hopeful about easing trade tensions.
• The Treasury Secretary said the U.S. is open to broad trade talks with China.
• China insists the U.S. drop all tariffs before formal talks start.
• Trump confirmed that Jerome Powell will stay as Federal Reserve Chair, calming markets.

What to Watch Next

The softening of the U.S. on China tariffs has lifted market moods, but things can still change quickly. Investors should keep an eye on:

• Official trade talks and any agreements on reducing tariffs
• China’s response to the U.S. tariff rollback offers
• Any new statements from the Federal Reserve on interest rates
• Political news that could affect trade and the economy

Conclusion

The recent easing of the hardline China tariffs by Trump, combined with stability in Federal Reserve leadership, gave a fresh boost to U.S. stocks. While China has not yet softened its position, the rise in markets shows growing hope that the long, tense tariff fight might ease soon. This shift could open doors to better trade relations and stronger economic growth. Keeping up with changes in China tariffs and trade talks will be key for investors and businesses watching these developments.

For additional context on the overall tariff landscape and historic escalations, the U.S.-China Business Council provides comprehensive data on tariff rates:

The US-China Business Council charts offering a detailed view of tariff schedules and impacts. Further reading on recent market reactions to Trump’s tariff reversals can be found in this related news article:
Trump reversals on Fed chair, China tariffs send markets higher
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Details Trump’s acknowledgment that 145% tariffs on China must drop “substantially,” prompting a market rally amid White House demands for reciprocal concessions from Beijing.