Wall Street inhales as Trump plays ‘tough guy’ with China
The article discusses President Donald TrumpS intensifying trade conflict with China, which has caused uncertainty among investors about whether ongoing trade negotiations will collapse or if Trump will soften his aggressive stance too reassure markets. Trump has escalated tariff threats in response to China’s recent export controls on critical earth minerals and its refusal to purchase American soybeans, which he called an “economically antagonistic act.” While Trump partly eased his tone briefly, stock markets remain volatile amid concerns over his tough rhetoric, including the possibility of ending business related to cooking oil imports from China.
Market analysts express skepticism about Trump’s readiness to maintain his hardline approach, predicting he may eventually back down, especially under pressure from the technology sector and potential negative impacts on artificial intelligence-driven economic growth. Some experts remain cautiously optimistic that both sides will ultimately reach a negotiated solution due to the high economic stakes.
Despite market turmoil, Trump’s advisors insist that the president is committed to reshaping trade relationships to benefit the U.S., highlighting that previous tough policies have yielded results. Meanwhile,planned meetings between Trump and Chinese President Xi Jinping are expected to proceed,and U.S. officials are preparing to provide updates on trade negotiations, aiming to reassure markets that a resolution is possible.
Wall Street inhales as Trump plays ‘tough guy’ with China
President Donald Trump’s escalating trade war with China has stock pickers holding their breath, unsure if the president will wipe out months of steadily progressing trade negotiations between Washington and Beijing or cave on his recent aggressive posturing to appease financial markets.
Since last week, the president has steadily ramped up his tariff threats against China in hopes of walking President Xi Jinping off of the increased export controls for critical earth minerals recently announced by Beijing.
And though Trump slightly softened his stance on Monday, enticing Wall Street to earn back most of last Friday’s losses, the Nasdaq Composite and S&P 500 both ended Tuesday in the red after the president floated “terminating business with China having to do with Cooking Oil.”
“I believe that China purposefully not buying our Soybeans, and causing difficulty for our Soybean Farmers, is an Economically Hostile Act,” Trump wrote on Truth Social. “We can easily produce Cooking Oil ourselves, we don’t need to purchase it from China.”
A half dozen stock pickers, working both on Wall Street and at funds across the country and given anonymity to speak candidly, told the Washington Examiner that they believed Trump had moved past the trade war “swings” that permeated the tariff talks across his first six months in office and are questioning just how long Trump’s aggressive posturing will last.
“The whole market basically forgot about the whole tariff war. This announcement opened an old wound. I think it is stupid because he clearly is just going to back down,” one analyst, who generally considers himself a supporter of the president, explained.
“He is trying to play tough guy again and it tanked the market the first time,” that person continued. “And there is so much leverage in the market right now, the swings are wild.”
A second analyst questioned how Trump’s China escalations and Beijing’s export controls for rare earths will impact artificial intelligence-backed economic growth, which has dominated Trump’s first year in office.
“The only thing that matters right now is the AI trade,” the analyst assessed bluntly.
One West Coast day trader pointed back to the “TACO” moniker Trump earned earlier this year after repeatedly delaying, or even reversing, his tariff threats.
“Trump always chickens out, and I don’t think this time will be any different,” that person joked. “He doesn’t have the stones to see this through to the end, especially if tech companies start to feel the squeeze. So I’d expect him to throw a fit, cave, and try to spin that as a big new trade deal for his base.”
Ulrike Hoffmann-Burchardi, global head of equities at UBS Global Wealth Management, told the Associated Press the same thing, albeit in more polite language.
“We remain cautiously optimistic that both sides will ultimately pursue a negotiated resolution, given the significant economic stakes,” he stated.
The White House declined to comment for this story, but a longtime Trump advisor discounted the “TACO talk” regarding tension with Beijing.
“Look, I could kind of understand that line earlier this year, but President Trump has demonstrated he’s committed to upending these trade relationships that have taken advantage of American companies and consumers for decades,” that person told the Washington Examiner. “Why would he go soft now, especially after he’s proven that these policies do in fact yield results and bring these countries to the table?”
Stocks plummeted on Friday after Trump announced a 100% tariff increase on Chinese imports, in addition to existing fees, in response to Beijing’s recently announced export controls and halting purchases of American soybeans.
And both sides have fired off a series of ensuing counter-threats, with Trump going so far as suggesting that he may scuttle his meeting later this month with Chinese President Xi Jinping in South Korea, though senior administration officials now say that the Xi meeting will proceed as previously planned.
Meanwhile, Trump and his top lieutenants are doing their best to signal to markets that his sniping at Beijing will have a negotiated resolution in the long term.
“We have to be careful with China. Look, I have a great relationship with President Xi, but sometimes it gets tested,” the president told reporters at the White House Tuesday afternoon. “China likes to take advantage of people, and they can’t take advantage of us. But we have a fair relationship with China, and I think it will be fine.”
Treasury Secretary Scott Bessent and U.S. Trade Rep. Jamieson Greer will likely offer similar insight at a press conference Wednesday morning that Treasury officials tell the Washington Examiner will give an update on negotiations with Beijing.
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“The Secretary and Trade Rep will discuss the ways in which President Trump’s economic policies are catalyzing and incentivizing capital investment into the U.S., the annual World Bank Group-IMF Meetings, recent trade updates, and news of the day,” the official said in a statement.
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