Stocks slip on Trump’s China decoupling comment; techs slid

·       Hawkish comments by Fed’ Powell also affected Wall Street; but Gold trading around a fresh life time high as a preferred safe-haven over UST

·       China wants to negotiate with the US in a respectful environment with an authorized official, not at gunpoint arbitrarily

·       Trump wants 1st call from China’s President Xi; but China believes in protocol-based negotiation, not Truth/Twitter-based random trade negotiations

On Monday, April 14, 2025, Wall Street Futures continued its Friday surge on hopes of real progress in the US-China/global trade & tariffs deal. Big techs led the rally on tariff exemptions for electronic products. The S&P 500 and the Nasdaq gained 1% each and the Dow was 250 points higher. The White House paused the aggressive tariffs on computers and electronics from their reciprocal tariff package, including those on China, but Trump later clarified that the temporary relief was only announced because sector-specific tariffs on computers and semiconductors will be placed shortly after.

Wall Street gained Monday on hopes of a pause in auto tariffs and exemptions for some tech goods. Despite Trump’s ongoing policy flip-flops, Wall Street rose on hopes that tariffs on Chinese electronics may be softer than earlier feared. China is supporting various MSMEs and also big companies with its incredible supply chains at a very reasonable cost. Apple surged 7%, while Tesla and Nvidia added 3%. On the earnings front, Goldman Sachs jumped 2.5% after the firm delivered strong results.

Last week, US stock markets initially sold off amid growing concerns over the global trade war but rebounded sharply after Trump announced a 90-day delay on most of the tariffs on April 9, 2025. The Dow gained 4.95%, the S&P 500 climbed 5.7%, and the Nasdaq Composite surged 7.29% in one of the best weekly gains in the last few years.

On Tuesday, April 15, Wall Street Futures snapped a day winning streak amid Trump trade war uncertainty, especially with China. President Trump said that China must return to the negotiating table to ease tariffs, emphasizing the leverage of U.S. consumer demand. Meanwhile, the Commerce Department launched a probe into semiconductor and pharmaceutical imports, signaling possible new tariffs. However, financials offered some relief, as Bank of America and Citigroup surged on earnings beat, while Johnson & Johnson slipped on subdued guidance amid China supply chain disruption despite beating estimates. Boeing dropped after reports that Beijing instructed Chinese airlines to halt new jet orders and even cancel existing orders.

On early Wednesday European session, April 16, 2025, Wall Street Futures slid on Nvidia's woes. Nvidia Future plunged after disclosing a $5.5 billion quarterly charge (fine) for violating US export restrictions on its H20 graphics processing units (GPU) to China and other countries. The market remains worried about escalating trade war tensions between the U.S. and China, as the Commerce Department opened an investigation into semiconductor and pharmaceutical imports—raising the prospect of further tariffs.

In the early Wednesday European session, Wall Street Futures also slid after a report that the White House may have imposed up to 245% tariffs instead of 145% on Chinese imports, citing retaliation and medical supply dependence.

On late April 15, 2025, the White House published a fact sheet on rare earth materials:

“Fact Sheet: President Donald J. Trump Ensures National Security and Economic Resilience Through Section 232 Actions on Processed Critical Minerals and Derivative Products-STRENGTHENING AMERICAN INDUSTRY: This Executive Order builds on previous actions taken by the Trump Administration to ensure U.S. trade policy serves the nation’s long-term interests.

On Day One, President Trump initiated his America First Trade Policy to make America’s economy great again.

On Liberation Day, President Trump imposed a 10% tariff on all countries and individualized reciprocal higher tariffs on nations with which the U.S. has the largest trade deficits to level the playing field and protect America’s national security.

More than 75 countries have already reached out to discuss new trade deals.

As a result, the individualized higher tariffs are currently paused amid these discussions, except for China, which retaliated.

China now faces up to a 245% tariff on imports to the United States as a result of its retaliatory actions. 

President Trump signed proclamations to close existing loopholes and exemptions to restore a true 25% tariff on steel and elevate the tariff to 25% on aluminum.

President Trump unveiled the “Fair and Reciprocal Plan” on trade to restore fairness in U.S. trade relationships and counter non-reciprocal trade agreements.  

President Trump signed a memorandum to safeguard American innovation, including the consideration of tariffs to combat digital service taxes (DSTs), fines, practices, and policies that foreign governments levy on American companies.

President Trump signed similar Executive Orders launching investigations into how imports of copper and imports of timber, lumber, and their derivative products threaten America’s national security and economic stability.”

The White House fact sheet has mentioned China tariffs at 245% maximum instead of 145%, which may be a simple typo, waiting for correction later in the day. In this way, Wall Street Futures slumped, while Gold jumped to a new life time high of around $3317 on an escalating Trump Trade war tantrum and a potential Trumpcession. But soon Wall Street Futures recovered on hopes of US-China reconciliations rather than protracted retaliation after China said it is open to talks if Trump shows respect and names a point person.

White House boasted about Chinese 245% Tariffs (up to)

On April 15, 2025, a White House fact sheet announced that Chinese imports face tariffs up to 245% due to Beijing’s retaliatory actions, building on an earlier increase to 145% (125% reciprocal tariff plus 20% fentanyl-related duty). This followed China’s tariff hike on U.S. goods to 125% from 84%. The 245% rate likely applies to specific goods like medical supplies (e.g., syringes) and EVs, which have already 100% tariffs from late 2024 under Biden.

But China does not export any EV to the US directly; it uses Mexico and Canada proxies to export Chinese EVs to the US under USMNC 0% tariffs or 25% tariffs (w/o USMNC). If we count from 2018 Trump 1.0 to April 15, 2025, the US and China had imposed almost 145% tariffs on each other goods and Trump also imposed 20% additional Fentanyl tariffs on Chinese goods

in the April 15 Fox News interview, Trump did not directly reference the 245% figure but emphasized his strategy of pressuring China through tariffs. He suggested nations “choose between us or China” in trade alliances, framing tariffs as a tool to force negotiations and protect U.S. interests. He expressed optimism about a deal, stating China would eventually come to the table, but maintained a hardline stance, accusing Beijing of unfair trade practices.

Response to China’s Conditions for Talks:

Trump has not publicly addressed China’s specific demands for respect and a designated point person in the Fox interview or subsequent statements. Instead, he has insisted that “the ball is in China’s court,” as conveyed by White House Press Secretary Karoline Leavitt on April 16, 2025. Trump has repeatedly said he’s waiting for a call from Chinese President Xi Jinping, suggesting Beijing must initiate talks.

In earlier comments (e.g., April 10, 2025, Oval Office remarks), Trump expressed confidence in negotiating with Xi, calling him “a smart guy” and predicting “a very good deal.” However, his administration has prioritized trade talks with other nations (e.g., Japan, South Korea, Vietnam, and India) to isolate China, indicating reluctance to meet Beijing’s preconditions without concessions.

Trump’s broader Tariff Strategy:

Trump paused reciprocal tariffs on over 75 countries for 90 days, maintaining a 10% universal rate (excluding China). He described this as a flexible move to encourage negotiations, emphasizing market volatility does not influence the decision. On April 15, 2025, Trump signed an executive order launching a Section 232 investigation into critical minerals imports, potentially targeting China, the largest producer of 30 of 50 critical minerals. This aligns with his narrative of reducing U.S. reliance on Chinese manufacturing.

On April 14, 2025, Trump posted on his Truth handle about NVIDIA

“NVIDIA COMMITS 500 BILLION DOLLARS TO BUILD A.I. SUPERCOMPUTERS, PLUS, IN THE UNITED STATES, EXCLUSIVELY. This is very big and exciting news. All necessary permits will be expedited and quickly delivered to NVIDIA, as they will to all companies committing to be part of the Golden Age of America!”

On April 15, 2025, Trump posted on his Truth handle about China:

“Our farmers are GREAT, but because of their GREATNESS, they are always put on the Front Line with our adversaries, such as China, whenever there is a Trade negotiation or, in this case, a Trade War. The same thing happened in my First Term. China was brutal to our Farmers, and these Patriots just held on, and a great trade deal was made. I rewarded our farmers with a payment of 28 Billion Dollars, all through the China deal.

It was a great transaction for the USA until Crooked Joe Biden came in and didn’t enforce it. China largely reneged on the deal (although they behaved during the Trump Administration), only buying a portion of what they agreed to buy. They had ZERO respect for the Crooked Biden Administration, and who can blame them for that? Interestingly, they just reneged on the big Boeing deal, saying that they will “not take possession” of fully committed aircraft. The USA will PROTECT OUR FARMERS!!!”

Economic Stakes:

The 245% U.S. tariffs, if broadly applied, could halt $650 billion in U.S.-China trade, raising typical U.S. household costs by around $4300 in 2025 and risking recession. China’s export controls on critical minerals threaten U.S. supply chains, while its outreach to other nations aims to mitigate tariff impacts.

Trump’s tariff escalations and rhetoric in the Fox interview reflect a strategy of maximum pressure, aiming to force China into concessions while rallying domestic support. However, the 245% figure lacks clear documentation, suggesting it may be a negotiating tactic or exaggeration for leverage. China’s preconditions for talks—particularly respect and a point person—signal a desire to avoid appearing weak, but Xi’s domestic political need to project strength makes compromise unlikely without significant U.S. concessions. The standoff risks a prolonged trade war, with both sides digging in, potentially destabilizing global markets and supply chains. Trump’s focus on other nations’ negotiations may weaken China’s position, but Beijing’s defiance and global outreach indicate resilience.

On early April 16, 2025, Trump posted in his Truth handle about Japan's trade negotiation and falling inflation despite tariffs:

“Japan is coming in today to negotiate Tariffs, the cost of military support, and “TRADE FAIRNESS.” I will attend the meeting, along with Treasury & Commerce Secretaries. Hopefully, something can be worked out which is good (GREAT!) for Japan and the USA!”

“The United States is taking in RECORD NUMBERS in Tariffs, with the cost of almost all products going down, including gasoline, groceries, and just about everything else. Likewise, INFLATION is down. Promises Made, Promises Kept!”

Over the past few days, President Trump has made significant moves on tariffs and trade, particularly escalating tensions with China while adjusting policies toward other trading partners.

Escalation with China:

Trump raised tariffs on Chinese imports to 145%, up from 104%, effective April 9, 2025, in response to China’s retaliatory tariffs. This followed Beijing increasing its tariffs on U.S. goods to 125% on April 11, 2025, after an earlier hike to 84%. The White House clarified that the 145% rate includes prior 20% fentanyl-related tariffs, intensifying the U.S.-China trade war. Trump justified the increase, stating China’s retaliation showed a “lack of respect for global markets” and positioned them as “bad actors.” He expressed confidence in a potential deal, saying, “China wants to make a deal,” but emphasized a hardline stance, noting, “When the United States is punched, he will punch back harder.”

Chinese Retaliatory Measures:

China has matched U.S. tariff hikes, raising duties on U.S. goods to 125% and imposing restrictions on rare earth exports, Hollywood films, and U.S. chips. Beijing has also directed Chinese airlines to halt Boeing deliveries, prompting Trump to accuse China of reneging on a deal (Truth Social, April 15, 2025). Meanwhile, China’s President Xi Jinping has signaled readiness for a prolonged trade war, framing U.S. tariffs as an attempt to suppress China’s economic rise. He has sought alliances with the EU and ASEAN, meeting Spain’s Pedro Sánchez and planning a Southeast Asia tour.

China’s Position on Trade Talks with the US: China will not negotiate with the US at gunpoint

On April 16, 2025, BBG reported that China is open to trade talks but demands that the Trump administration show respect by curbing disparaging remarks from cabinet members, maintain a consistent U.S. position, and address China’s concerns on sanctions and Taiwan. Beijing also insists on a designated U.S. point person with Trump’s backing to prepare a deal for Trump and Xi to sign. Chinese Foreign Ministry spokesperson Lin Jian, on April 15, 2025, responded to the 245% tariff claim by saying, “You can ask the US side for the specific tax rate figures,” reflecting skepticism and a call for clarity. Lin emphasized that China’s retaliatory tariffs were “reasonable and legal” to protect its interests. China may also replace the present Chinese Premier Li with someone else to talk with the US counterpart Geer (USTR).

Chinese officials, including former Vice Minister of Finance Zhu Guangyao, have consistently stated that talks require mutual respect, peaceful coexistence, and a win-win mindset. Beijing has criticized U.S. tariffs as coercive, with Commerce Ministry spokesperson He Yongqian (April 10, 2025) asserting that “pressure, threats, and blackmail” are ineffective.

China’s demands for respect stem partly from remarks by U.S. officials, such as Vice President JD Vance’s comments about “Chinese peasants,” which Lin Jian called “ignorant and disrespectful.” Beijing views Trump’s control over his administration as absolute, interpreting such statements as reflective of his stance unless disavowed.

Chinese President Xi Jinping, in talks with Spain’s Pedro Sánchez, criticized U.S. “bullying” and advocated for free trade, signaling efforts to align with other trading partners like the EU. China’s commerce ministry accused the U.S. of violating trade agreements.

Feasibility of Talks:

China’s conditions—respect, consistency, a point person, and addressing sanctions/Taiwan—are at odds with Trump’s approach, which prioritizes U.S. leverage and demands Beijing make the first move; but Trump is insisting in his casual diplomacy on Xi initiating the phone call is clashing with China’s protocol-driven diplomacy, where appearing to capitulate could weaken Xi domestically.

Pause on Trump Tariffs for Other Countries:

On April 9, 2025, Trump announced a 90-day pause on steep “reciprocal” tariffs for over 75 countries, reducing them to a universal 10% rate, excluding China. This reversal came hours after new tariffs took effect, prompted by global market turmoil and a $29 trillion selloff in the U.S. Treasury market. The pause was partly driven by market volatility, with Trump acknowledging that people were “getting a little bit yippy” and “queasy” about bond market reactions. He described the pause as a strategic move to encourage negotiations, noting that countries like Japan, South Korea, India, and Vietnam were engaging in trade talks.

Trump’s Negotiations, Comments, and Strategy: Bullying tactics, something which China may never accept

Trump’s Treasury Secretary, Scott Bessent, indicated that the tariffs were a tactic to bring countries to the negotiating table, with over 75 nations, including Vietnam and Taiwan, initiating trade talks. The administration is prioritizing deals with Asia-Pacific countries surrounding China. Trump framed the pause as a response to countries “kissing up” to negotiate, claiming his strategy was to “reset the global trade system.” He suggested flexibility, stating, “You have to be flexible,” despite earlier denials of considering a pause.

Trump has been vocal about China’s trade practices, accusing them of not knowing “how quite to go about” making a deal. He threatened additional tariffs if China didn’t remove retaliatory duties, following through with a 50% hike when Beijing didn’t comply. He posted on Truth Social, encouraging companies to relocate to the U.S. with “zero tariffs” and “no environmental delays,” framing his policy as a way to revive American manufacturing. Trump expressed optimism about a resolution, stating, “At some point, hopefully soon, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable.”

Trump on Global Markets and Tariffs

Before the pause, Trump downplayed market concerns, posting “BE COOL!” on Truth Social and claiming, “Everything is going to work out well. The USA will be bigger and better than ever before!” After the pause, he acknowledged market pressures, admitting he was watching bond market reactions and that the downturn influenced his decision. He described the post-pause bond market as “beautiful.”

On Economic Impact: Short-term pain for long-term gain

Trump brushed off short-term market downturns during a Cabinet meeting on April 11, 2025, acknowledging “transition problems” but insisting his policies would benefit the U.S. long-term. He suggested tariffs were a tool to force fair trade, particularly with China, and claimed his actions were unprecedented, saying, “No other president would have done what I did.”

While Trump presents his tariffs as a bold strategy to restore U.S. manufacturing and leverage trade deficits, the erratic rollout—marked by rapid reversals and mixed messaging—suggests a lack of cohesive planning. The focus on China aligns with his “America First” rhetoric, but the unprecedented tariff levels risk isolating the U.S. economically, especially as China courts allies like the EU. The 90-day pause may buy time for negotiations, but the ongoing U.S.-China tit-for-tat could entrench a costly trade war, with consumers likely bearing the brunt through higher prices.

Trump’s existing tariffs of 10% on all US imports, coupled with 145% tariffs on Chinese goods (almost 15% of total merchandise imports), and sectoral tariffs of 25% on automobiles/ parts, metals will effectively make overall weighted US merchandise tariffs over 27.5% against earlier 2.5%. This will inevitably cause a higher cost of living for Americans, higher inflation, subdued discretionary consumer spending, tepid private capex/business investment, and eventually stagflation or an all-out recession.

Although, the US importers may have already stocked enough imported goods from China and elsewhere well in advance anticipating Trump trade war policies, and Trump also knows that very well, it may not be possible to make country-specific trade deals with every major trading partner like China, Japan, India, Vietnam, and EU within June 2025.

Trump will also keep sectoral tariffs on automobiles & parts (25%), metals (25%), pharmaceuticals (15-25%), and electronics (15-25%) for national security (no dependency on a foreign country/China) and also to make America Great Again. Thus Trump is also taking the path of US protectionism in tariff deals with other countries rather than a simple & straightforward 0% or 10% minimum tariff across the globe.

Although the Trump admin is giving priority to countries like Japan, South- Korea, India, Vietnam, and Israel in trade talks, it may not be possible to have a definitive trade deal before July 9, 2025, for all the countries including India, considering the overall complexity of the issue. Thus we may see another extension of ad-valorem reciprocal tariffs even after some Trump rhetorics. India and also other countries are waiting for July’25 as by then Trump’s popularity will face November’26 US mid-term election dilemma. And Trump’s trifecta may be questionable. Thus India, China, and also other countries may keep the Trump admin busy in marathon trade talks till at least H1CY26. By then Trump’s popularity and credibility may be at stake due to his bellicose policies, especially on trade and tariffs.

China has a strategic advantage in Trade war with the US.

Trump took almost two years for the China trade deal phase one (2020). Why there is a need for another China trade deal after marathon negotiations for over two years? The US trade deficit is a structural issue as its economy is service-oriented, not manufacturing and outsourcing from cheaper Asian and other sources. The US-China trade deficit (goods + service) was around $379 billion in 2018, dropped to $307B in 2019, $284.7B in 2020, but again increased after COVID to $326.6B in 2021, 349.4B in 2022 and then slumped to 242.4B in 2023 and $259.3B in 2024 due to diversification or transform to Vietnam, Mexico and other third countries (Chinese proxies or transshipments).

The U.S.-China goods trade reflects structural imbalances: U.S. consumer demand drives imports of low-cost electronics and apparel, while China’s demand for U.S. agriculture and tech is constrained by tariffs and diversification. Services trade, once U.S. strength is now weakening as China’s digital and logistics sectors grow. Trump’s tariffs aim to reduce the perceived large but risk disrupting supply chains for critical goods (e.g., semiconductors, rare earths) and narrowing the services surplus by deterring Chinese students/tourists. China’s transshipments and global trade alliances (e.g., with ASEAN) mitigate tariff impacts, suggesting limited U.S. leverage without broader industrial policy reforms.

The U.S.-China trade deficit reflects structural differences: high U.S. consumer demand and low savings rates (7% of disposable income) versus China’s export-driven economy and high savings (30%+). Tariffs have reduced the deficit modestly but shifted trade to costlier third countries (e.g., Vietnam), acting as a de facto tax on U.S. consumers. China’s reported export data suggests underreported U.S. imports, complicating deficit calculations. Trump’s 2025 tariff hikes may shrink the deficit by curbing trade volumes but risk inflation and supply chain chaos, with limited evidence of reviving U.S. manufacturing. China’s conditions for talks (respect, a point person) are unlikely to be met, prolonging the standoff.

Conclusions: There is no Clear Winner in a trade war, but China has a Short-Term Edge

In the 2025 trade war, China holds a slight strategic advantage due to its supply chain leverage, export diversification, and Xi’s domestic political buffer, which allow it to weather tariffs better than the U.S., where both Wall Street and Main Street are capitulating amid the plunge in the market and increasing public protest as Americans face immediate cost hikes.

However, in the broader Cold War-like competition, the U.S. has a long-term edge if it leverages its USD hegemony, global alliances, technological leadership, and military presence effectively. The critical factor is Trump’s ability to secure allied trade deals within the 90-day tariff pause (by July 2025) to isolate China, as outlined in the Fox interview. China’s counterstrategy—deepening ties with ASEAN, the EU, and others—exploits U.S. missteps, making the outcome hinge on diplomatic execution. Both the US and China may be now trying to isolate each other in global trade.

Both sides face risks of overreach. Trump’s improvisational tariffs may backfire if allies resist, while China’s economic slowdown and reliance on exports (12.3% to the U.S.) limit its invincibility. The rivalry is less a zero-sum Cold War than a high-stakes game of interdependence, where miscalculations (e.g., over Taiwan) could escalate beyond trade; Neither side can “win” without significant costs, and third parties (e.g., EU, ASEAN) may gain by playing both sides.

Trump will gradually soften his hawkish China tariff narrative as he may be now realizing the reality that the US is still far away from becoming a viable alternative for the Chinese manufacturing hub; it’s not only the question of China’s relatively cheaper labor force, but China's extensive supply chain, infrastructure, and skilled workforce in supporting high tech industry. And China’s labor cost is now no longer cheap as China is also now a developed country at least urban China.

Also, the US is far behind in terms of China’s manufacturing and logistical infra. Apart from ordinary American consumers, various big US corporations and also MSMEs are largely dependent on China's supply chain for their requirements; it’s not easy to make the US or any other country a viable alternative to China to match their scale, efficacy, quality, and cost.

China will negotiate with the Trump admin in a mutually respectful environment; will never negotiate at gunpoint. But the question is why there is a requirement for another trade deal with China after a comprehensive trade deal in 2020 and that too after 2 years of marathon negotiations bet, why is there a need for another China trade deal? Trump should propose a 5-10% universal tariff and GST for every country, ensuring free & fair access for all.

Trump often blames the onus of the US merchandise trade deficit on China and other exporter nations including some of US allies. Trump also blamed China, Mexico, and even Canada for illegal drug and human trafficking into the US. But before blaming someone, Trump should have repaired their own house and introspected, why China is outpacing the US in trade, education, innovation, healthcare, infra development, techs, and even military jets.

The US has to reset now to compete with China rather than burning down in jealousy. Trump should also introspect why Americans are increasingly addicted to drugs and crimes. Drug addiction & supply chain is a global issue; no specific country can be blamed for this and it’s a collective responsibility also. Why the US is failing to prevent drug and human smuggling?

Trump needs higher revenue to fund his deficit spending like tax cuts and other planned infra stimulus. Thus he is eager to impose higher tariffs on Americans in the name of China & other exporters. Exporters will stop accepting orders from US importers rather than paying such Trump tariffs at gunpoint. China may even scrap the phase one trade deal with the US and even stop sending goods to the US.

In reality, the US and China are both dependent on each other for prosperity and development. Both the US and China have coexisted for decades in a win-win situation. Despite significant expansion & diversification in global trade, the US is China's number one client at around $500 billion annually.  For the US, China is also the largest market after the EU and many US MNCs are quite dependent on Chinese revenue.

The US may not find an alternative global or local supply chain instead of China and China may also face difficulties in finding a single alternative for America.  However, China is at an advantage due to its strategic expansion of trade globally for the last two decades rather than being too dependent on any single country or trade block like the US and EU. 

Thus we may soon see signs of reconciliations rather than engaging in protracted trade confrontations. Back channel talks may have already started between the US and China, which may take a definitive step towards a phase two trade deal by the next 90 days. China will negotiate from the position of strength, and mutual respect, not US bullying.

Trump Admin and its core advisory team are divided between China & tariff hawks and doves. Trump is also under pressure from his corporate donors & active advisors like Musk, various prominent Republican Leaders, and Wall Street along with Main Street. Thus Trump is now showing more compulsion for an immediate trade deal with China and blinking first.

America is not a manufacturing power hub; it has to import almost half of its domestic merchandise requirement. Cheaper imported goods help to maintain the overall lower cost of living and the Goldilocks nature of the US economy. If Trump's tariffs are implemented at face value, American families are -with estimates suggesting an average $1,300-$4000 increase per year for a person to a small typical family of three. This would be very difficult for a typical middle-class American family most of which live paycheck to paycheck.

Although Trump's logic about higher tariffs and targeted regulation on certain other countries is right, it does not apply to China, especially after the 2020 Phase One China trade deal. The US political and policy uncertainty is now a big headache for the rest of the world and also US investors.

Trump could have introduced Federal sales tax on goods & services like 10% GST or VAT along with a minimum basic universal tariffs of 5-10% globally coupled with no targeted non-tariff barriers by all countries. But this may not be the case and it's almost impossible to negotiate with 100-odd countries worldwide for a definitive bilateral trade deal within this short period of 90 days.

Thus eventually, Trump may scale back his reciprocal tariffs completely and may impose only a 5-10% universal basic tariff for all including China for the sake of the US economy. At the same time, Trump may provide fresh income tax cuts for American workers and businesses to undo the tariff damage on the US economy.

Trump will use reciprocal tariff threats on various countries like India to reduce its exorbitantly high tariffs and very stringent regulations against free & fair trade. India or even the US can't encourage inefficiencies by promoting higher tariffs and non-tariff barriers. Higher tariffs and local sales taxes cause higher cost of living and distort price stability. And without price stability, no economy can function properly as we have seen in the case of Tariff & GST King India.

Trump already blinked and postponed reciprocal tariffs rhetoric after Japan attempted some US Treasury selling on April 9, 2025, but failed due to a lack of buyers on the other side, resulting in an almost dysfunctional US Treasury market and resultant Wall Street capitulation.

Bottom line: The US and China are dependent on each other for prosperity and development

Trump’s comments about keeping patience amid Wall Street turmoil and urging traders/investors to buy the market along with the overall Chinese tone indicate back-channel negotiations between the two largest economies in the world, controlling almost 45% of global nominal GDP. The US and China may soon officially reach out to each other to resolve this trade issue. Trump may soon announce a 90-day pause for Chinese tariffs also, keeping only the 20% Fentanyl tariffs for the time being, which may be reduced to universal basic levels of 10% by the next few weeks after China takes some ‘bold steps’ in addressing the US concern of Fentanyl production & trafficking. Trump and Xi both will move after satisfying their respective domestic political compulsion.

Market impact:

On early Wednesday, Wall Street Futures slumped on Trump trade war uncertainty and growing concern about tech/chip export by various US big techs to China. Nasdaq-100 plunged almost 2%, the S&P 500 lost 1.3%, while DJ-30 slips almost 200 points. Nvidia plunged after the company disclosed that the US government had blocked sales of certain AI chips to China without a license. Nvidia also stated it expects to take a $5.5 billion revenue hit this quarter as a result. Shares of other chip stocks were also sharply lower, including AMD and Micron Technology; Mega caps also slumped led by Apple, Microsoft Meta, Amazon, and Alphabet.

On the data front, retail sales rose 1.4% mom in March, the sharpest rise since January 2023 as consumers ramped up spending on cars and grocery items to avoid tariffs. Gold jumped on no signs of a trade war truce between the US and China and Trump’s strategy to decouple China.

Weekly-Technical trading levels: DJ-30, NQ-100, and Gold

Looking ahead, whatever the fundamental narrative, technically Dow Future (CMP: 40700) now has to sustain over 40100 for a further rally towards 41300/42300-43300/44600, and even 45200 in the coming days; otherwise sustaining below 40000, DJ-30 may again fall to 39700/38600-37000/36200 in the coming days.

Similarly, NQ-100 Future (19000) has to sustain over 19300 for a further rally to 196000/20000-20900/21400 and even 22000-22400 in the coming days; otherwise, sustaining below 19250, NQ-100 may again fall to 18600/18000-17600/16400 and 16200-15800 in the coming days.

Also, technically Gold (CMP: 3240) has to sustain over 3265-3275 for a further rally to 3305/3335*-3355/3375*-3400/3425, and even 3450/3500-3525/3555 in the coming days; otherwise sustaining below 3255-3245, Gold may again fall to 3180/3130-3065/2990 and 2960/2900*-2800/2750 in the coming days.