Trump: US Tariffs on China Will Be ‘Substantially Reduced’

Recent signals from the administration of President Donald Trump suggest a potential softening in the trade conflict with China, sparking optimism in financial markets. Following weeks marked by escalating tariff announcements, investors are now observing indications of a possible de-escalation, reflected in early trading gains on Wall Street.

Potential Shift in US Tariff Policy

President Trump himself has hinted at a change in direction regarding the significant tariffs imposed on Chinese goods. Acknowledging the severity of current measures, he stated, “A 145% rate is too high; it will be substantially reduced.” This comment suggests a significant policy adjustment might be under consideration. Furthermore, the President expressed an intention to adopt a more agreeable stance to facilitate a trade agreement.

Adding weight to this potential shift, Treasury Secretary Scott Bessent reportedly views the reciprocal tariffs between the U.S. and China as unsustainable. The Secretary indicated that these measures ultimately harm both nations rather than providing clarity or resolution to the underlying trade issues.

Context and Market Reaction

This potential easing comes after a period of heightened trade tensions. Notably, China had previously increased its tariffs on U.S. goods from 84% to 125% shortly after the U.S. implemented its own tariff hikes on Chinese products. It’s also speculated that major American corporations, including prominent names like Apple, Tesla, Nike, and Ford, exerted pressure on the administration. These companies have reportedly faced significant financial strain in recent weeks due to the trade dispute’s impact.

The possibility of reduced tariffs was met with immediate enthusiasm from investors. Major U.S. stock indices, including the Nasdaq and the S&P 500, experienced substantial gains, opening Wednesday’s trading session over 3% higher.

Future Outlook and China’s Position

While official changes are pending, reports suggest the administration might be considering lowering the tariffs on Chinese goods from the current 145% down to a range between 50% and 65%. This aligns with the broader sentiment favouring de-escalation.

China, meanwhile, maintains a clear position. Foreign Ministry Spokesperson Guo Jiakun articulated Beijing’s stance: “China’s attitude towards the tariff war initiated by the United States is quite clear: we do not want to fight, but we are not afraid. If we fight, we will fight to the end; if we talk, the door is wide open.” He emphasized that any dialogue must be based on principles of “equality, respect, and mutual benefit.”

Markets remain watchful, anticipating a potential meeting between President Trump and his Chinese counterpart, Xi Jinping. Such a meeting could provide much-needed clarity on the future of reciprocal tariffs and the broader global economic landscape.