Stocks vault higher as Trump blinks first on China tariffs

UPDATE: When asked by reporters after his speech, Bessent then denied that the White House would lower China tariffs unilaterally, saying instead that the process would be "mutual". Additionally, Bessent said the White House was looking beyond tariffs to non-tariff barriers to US goods and Chinese corporations' reliance on government subsidies. He said a full framework agreement with China could take two to three years but that a general framework with India was already taking shape.

The Trump administration admitted on Wednesday what Treasury Secretary Scott Bessent had alluded to on Tuesday — that it is considering reducing tariff rates on China in the face of the heavy pressure it has caused on US businesses and the stock market.

In what appears like a coordinated leak, multiple White House officials told The Wall Street Journal that Donald Trump is considering cutting the current 145% tariff rate on Chinese goods by more than half in certain cases. This might place the trade-weighted tariff rate on Chinese goods closer to the 54% rate that Trump introduced on April 2 — what the White House termed Liberation Day.

The stock market surges on hint of reduced China tariffs

Stocks are euphoric at the news, although nothing has changed as of yet. The NASDAQ Composite exploded by more than 4%. The Dow Jones Industrial Average (DJIA) advanced 2.4%, and the S&P 500 jumped 3% by mid-morning.

The bond market was affected by the news as well. Investors sold off 12-month to 5-year US Treasury tenures and bought 10-year and 30-year bonds instead. This pushed the yield on the 30-year down nearly 2% to 4.78%.

Nearly 80% of Dow Jones stocks have made gains. The index has been led by Boeing (BA) and Amazon (AMZN), both etching greater than 6% gains. Nvidia (NVDA) and American Express (AXP) both gained above 5%, while Apple (AAPL), Salesforce (CRM), JPMorgan (JPM), Microsoft (MSFT) and Goldman Sachs (GS) also gained more than 3%.

Bessent calls for more equal trading regime

Treasury Secretary Scott Bessent gave a speech about trade at the Institute of International Finance on Wednesday morning in which he set out the administration's case for a new global trade regime that favored a "balanced" approach.

Bessent said that the Bretton Woods architects who set up the international trade rules after World War II recognized the need for economic coordination. However, "Everywhere we look, we see imbalance," said Bessent.

The Treasury Secretary said the Trump administration said the world trade order suffered from a "persistent over-reliance on the United States for demand." The White House, he said, would use tariffs to reduce that demand for foreign goods and create a more level playing field.

Bessent said that 100 or so countries had approached the administration about negotiating new bilateral trade deals that he said would be more "balanced". This term appears to suggest less reliance on free trade and the desire for foreign nations to directly reduce their trade deficits with the United States.