Trump Eases China Trade Threats, U.S. Stocks Jump
Trump reduces threat of 100% tariffs on China. U.S. stocks climb, Bitcoin recovers, and investors watch the upcoming Trump-Xi meeting.
U.S. stock futures jumped Monday after President Donald Trump hinted at scaling back his threat of 100% tariffs on Chinese imports. The announcement followed last week’s sharp market drop, which saw the S&P 500 and Nasdaq fall after Trump warned of canceling his October meeting with President Xi Jinping.
Trump posted on Truth Social: “Don’t worry about China, it will all be fine! President Xi had a tough moment. We both want strong economies, not a depression. The U.S.A. aims to support China, not harm it.”
The announcement sparked a strong market reaction. Pre-market trading saw S&P 500 futures jump up to 1.6%, while the Dow Jones and Nasdaq also rose. Bitcoin and other cryptocurrencies, which dropped sharply last week, partially recovered, though Bitcoin remained below its recent $125,000 peak.
Last Friday, Trump had warned of cancelling a planned meeting with Chinese President Xi Jinping and proposed a 100% tariff on Chinese imports, following new Chinese restrictions on rare earth metals. These materials are crucial for U.S. electronics, vehicles, and defense equipment. The threats had triggered the largest one-day losses for major U.S. indexes in months.
Despite the volatility, investors are betting the tariff threats are largely for negotiation purposes—a strategy analysts jokingly call the “TACO trade” (Trump Always Chickens Out).
Michael Brown, senior strategist at Pepperstone, noted that market confidence has returned as traders interpret Trump and Vice President J.D. Vance’s weekend statements as signals that the steep tariffs are unlikely to be fully implemented. Vance also urged China to act reasonably while emphasizing the U.S. has “more cards” in negotiations.
Meanwhile, recent Chinese export data shows resilience in the global market. September shipments rose 8.3% compared to a year ago, their fastest growth in six months, despite falling exports to the U.S. Analysts say this strengthens China’s bargaining position.
China also warned it would respond if the 100% tariffs go ahead. A spokesperson for the Chinese commerce ministry stated: “High tariff threats are not a proper way to handle trade relations. We do not want a trade war, but we are prepared.”
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