Trump: Tattoo-for-tat tariff hikes between the United States and China may end

Source: China Securities Journal

There may have been some positive changes!

US President Donald Trump said on Thursday local time that the tit-for-tat tariff hikes between the United States and China may soon come to an end. When talking about tariffs at the White House, Trump said, "I don't want tariffs to keep rising, because at a certain point, people will stop buying."

Perhaps influenced by this, international oil prices soared by nearly 3% yesterday, and the composite copper price also rebounded significantly. This morning, the Asian-Pacific stock markets also reacted positively. The stock markets of Japan, South Korea, and Australia all saw good gains. At the same time, traders for the first time in two weeks have turned to betting that the Chinese yuan will rise slightly in the next month.

Trump's Hint

According to Reuters, Trump said on Thursday that the tit-for-tat tariff hikes between the United States and China may soon come to an end. When talking about tariffs at the White House, Trump told reporters, "I don't want tariffs to keep rising, because at a certain point, people will stop buying." "So, I may not want to set the prices higher, or even reach that level. I may want to set the prices lower, because you want people to buy, but when the price reaches a certain point, people won't buy."

Trump said that since the proposal of imposing tariffs, the United States and China have been in contact, and he is optimistic about reaching an agreement.

At the same time, Trump also expressed his views on the agreement with the European Union. According to CCTV News, it was learned on April 17 local time that Italian Prime Minister Giorgia Meloni arrived at the White House for a meeting with Trump. Officials of the Trump administration said that the two sides are expected to discuss a series of topics during the meeting, including trade, immigration, and ending the conflict in Ukraine. In addition, it is expected that Meloni will put pressure on Trump on trade and tariff issues.

An official said that Trump "attaches great importance to this matter" and the White House "is ready to reach an agreement." When a reporter at the scene asked Trump how confident he was about reaching a trade agreement with Italy, Trump mouthed, "Very confident." Trump said on the same day that he is "100% confident" of reaching a trade agreement with the European Union before the end of the 90-day tariff suspension period.

As the United States has continued to negotiate with various parties on tariff issues recently, Trump said that the US government "is not in a hurry" to announce an agreement with a specific country, but will announce relevant information "at some point."

The Warning from the International Monetary Fund (IMF)

On the eve of the Spring Meetings of the International Monetary Fund (IMF) and the World Bank, IMF Managing Director Kristalina Georgieva delivered a speech on Thursday (the 17th), issuing a warning about the Trump administration's tariff policy. She said that the IMF will release the World Economic Outlook next Tuesday (April 22), and the "off-the-chart" global trade uncertainty will lead the IMF to significantly cut its global economic growth forecast and also raise the inflation index for some countries.

Kristalina Georgieva said that she will not assert for now that Trump's trade policy will trigger changes in global economic growth. In the World Economic Outlook released by the IMF in mid-January this year, the IMF expected that the global economy will grow by 3.3% in 2025, roughly the same as in 2024 (3.2%), and the US economy is now expected to grow at a rate of 2.7%.

However, Trump has been in office for three months and has already thrown the US and global economies into chaos. The Peterson Institute for International Economics predicted earlier this week that the US economic growth rate this year will be only 0.1%, far lower than last year's 2.5%. Kristalina Georgieva said that when aggregating all the recent tariff hikes, suspensions, escalations, and exemptions, the effective tariff rate in the United States has jumped to the highest level in generations.

She warned that the continued uncertainty in trade policy may lead to more financial market stress events, such as a sharp drop in US stocks. She said, "Although uncertainty has increased, the US dollar has depreciated, and US Treasury bonds are showing a'smile' - and this is not the kind of smile people want to see. These expressions should be regarded as warning signs. If the financial environment deteriorates, everyone will suffer."

Kristalina Georgieva is the latest heavyweight figure this week to express concerns about Trump's trade policy. World Bank President Ajay Banga and Federal Reserve Chairman Jerome Powell have both issued warnings about the possible negative impacts of Trump's policies. The European Central Bank (ECB) also cut interest rates on Thursday and warned that the trade tensions have intensified and the economic growth outlook has deteriorated.

The Market's Reaction

Last night, the US stock market reacted rather mildly to Trump's new statement. During this process, one thing is also worthy of attention. Although the US stocks and US Treasury bonds have been in a weak trend recently, the data released last night showed that the Federal Reserve's balance sheet reduction trend does not seem to have changed.

This morning during the early trading session, the Asian-Pacific stock indexes performed well, indicating that the market's concerns about tariffs have eased. At the same time, the performance of commodity futures is also quite prominent. International oil prices, and the rebounds of non-ferrous metals such as copper and tin are also very obvious.

In the foreign exchange market, the Japanese yen continued to rise, and the Chinese yuan also witnessed an expected rebound. There is news that traders for the first time in two weeks have turned to betting that the Chinese yuan will rise slightly in the next month. The one-month USD/CNH risk reversal indicator entered negative territory for the first time since April 2 on Thursday, at -0.05%, indicating that put options are in the ascendancy. The indicator once reached 1.18% on April 9. Traders are currently paying a higher price for put options betting on the decline of USD/CNH than for call options. The situation in the past few weeks was exactly the opposite, when the premium of call options relative to put options continued to expand.

Disclaimer: The views in this article only represent the personal views of the author and do not constitute investment advice on this platform. This platform makes no guarantees regarding the accuracy, completeness, originality, and timeliness of the article information, nor does it assume any liability for any losses caused by the use of or reliance on the article information.