Trump Signals China Tariffs Might Ease

Wall Street is looking for any sign that the White House has its foot on the brakes in its game of tariff chicken with China. And finally, it’s begun receiving one: President Trump said this week, “We’re going to be very nice. They’re going to be very nice,” and that tariffs will “come down substantially.”

The S&P 500 jumped more than 2% after those conciliatory words and a report yesterday that the administration is considering rolling back its 145% tariff on Chinese imports:

• The Wall Street Journal reported that trade officials are mulling lowering the levy to 35% for Chinese goods not related to national security.
• The report also said the overall tariff rate on Chinese imports might come down to 50%, which is still steep, but represents a significant reduction from current trade-halting levels.

But nothing is decided yet…Treasury Secretary Scott Bessent threw cold water on investors’ rosiest hopes yesterday afternoon by saying that the administration isn’t considering lowering tariffs unless China does the same, which led the stock market to give back some of its earlier enthusiastic gains. Still, Bessent said that he sees an opportunity to make “a big deal,” and earlier he said that the current standoff was unsustainable.

What might be changing Trump’s tune?

The economy has been sending some SOS signals, like the S&P 500 declining every week since Trump announced a hefty blanket tariff on all Chinese goods earlier this month.

This week, retail honchos including the CEOs of Walmart, Target, and Home Depot met with the president to voice concerns about expected price hikes and store shelves emptying in a matter of weeks as tariffs hinder global logistics—which Bloomberg reports the president was receptive to.

American importers have already begun to cancel shipments from China, with US–China shipping falling 60% in the weeks since the latest tariffs on China were announced, according to logistics firm Flexport.

Looking ahead…Flexport warns that a tariff rollback could have companies scrambling to rebook space on container vessels, which would abruptly drive up shipping costs.—SK