Markets rally as Trump signals major tariff cuts amid easing tensions with China

Tensions between the United States (US) and China seem to be subsiding after President Donald Trump affirmed that tariffs on Chinese goods would be slashed.

According to reports, Trump does not intend to cease trade hostilities entirely as tariffs are not to be shelved; however, in light of the president’s statement at a news conference on Tuesday, analysts believe the same will fall sizably from their current high of 145 percent.

US Treasury Secretary Scott Bessent was also cited as calling tariff levels as “unsustainable” before President Trump announced an attempt to find an amicable solution to navigate rising US-China tensions. As per reports, Trump has stated that the US is “doing fine with China”, claiming that tariff rates were to face cuts in the coming period. 

The statement reinvigorated US investors as capital markets across the US witnessed bullish sentiments. The New York Stock Exchange (NYSE) composite climbed 422.77 points during intraday trading, reflecting a 2.34 percent positive movement in the index.

Moreover, the National Association of Securities Dealers Automatic Quotation System (NASDAQ) composite grew by 2.71 percent after recording a 429.52 point rise in the index. Similarly, the Standard and Poor's 500 (S&P 500) logged an impressive 2.51 percent after gaining 129.56 points during trading hours.

The aforementioned data indicates that a market-wide recovery is on the table after the tariff war upended capital markets. While Trump's initial tariffs caused markets to tumble, China’s imposition of a 125 percent tariff rate on US imports accelerated the fall.

Trump himself has also outlined the positive sentiments in the stock markets that came about because of news of the potential tariff cuts.

However, with the president claiming that the US and China are going to “live together very happily”, analysts believe that the global economy is now on track to protect the interests of business owners, industrialists and investors again.

Reports suggest that China has not yet provided an official response to the developments. However, Chinese citizens have taken to social media highlighting how Trump has lost the trade war to China.

China is also reportedly applying diplomatic pressure to isolate the US from its allies. South Korean companies have allegedly been “pressured” by China to halt shipments of supplies to US military contractors.