Trump suggests China tariffs will ‘come down substantially’
President Donald Trump suggested the China tariffs will “come down substantially.”
- Reports suggested China is considering suspending its 125% tariff on select U.S. imports, following indications that Washington may cut tariffs on Chinese goods.
- The S&P 500 has now recouped nearly 80% of the losses suffered since the post–April 2 “Liberation Day” downturn.
Investor appetite for risk rebounded over the past week as the U.S. administration signaled a de-escalation in trade tensions with China. President Donald Trump also reassured markets that he has no intention of firing Federal Reserve Chair Jerome Powell.
Reports suggested China is considering suspending its 125% tariff on select U.S. imports, following indications that Washington may cut tariffs on Chinese goods. Trump hinted that negotiations with Beijing are ongoing, even as Chinese authorities denied any such talks were taking place.
The sell-off that had weighed on U.S. Treasuries and the dollar the previous week came to a halt, as investors found reassurance in the central bank’s independence.
The S&P 500 has now recouped nearly 80% of the losses suffered since the post–April 2 “Liberation Day” downturn.
Private sector growth slows, consumer sentiment down
Yet, recent business and consumer surveys paint a less optimistic picture. U.S. private sector growth slowed in April to its weakest pace in 16 months, according to flash Purchasing Managers’ Index data. Business expectations for the year ahead have dropped to near-COVID-19 pandemic lows, while prices for goods and services rose at the fastest pace in over a year, particularly in manufacturing, where tariffs are playing a key role in driving costs higher.
Consumer sentiment also deteriorated sharply. The University of Michigan’s gauge fell 8% this month, with expectations down 32% since January — the steepest three-month drop since the 1990 recession. One-year inflation expectations surged from 5% to 6.5%, the highest since 1981, while long-term inflation expectations rose from 4.1% to 4.4%.
Among individual stocks, ServiceNow, the cloud-based platform-as-a-service company that helps businesses manage processes, led the S&P 500 with a 20% weekly gain on strong earnings and upbeat forward guidance. In contrast, tech and multinational defense company Northrop Grumman fell 15% after cutting its 2025 outlook.
Tesla posted its biggest weekly rally since early November 2024, despite underwhelming earnings. Investors cheered Elon Musk’s pledge to reduce his involvement in Washington and refocus on leading the EV company.
Watching for jobs report and interest rate moves next week
Looking ahead, macroeconomic data will likely dominate the headlines next week. May 1 brings the release of the advance estimate for first-quarter GDP and the Fed’s preferred inflation gauge for March, followed on May 2 by the closely watched April jobs report, offering fresh clues on how tariffs are affecting the labor market.
Benzinga is a financial news and data company headquartered in Detroit.
