Key Points
- The Trump administration is signaling it’s open to a deal to de-escalate the latest trade fight with China.
- This comes after President Trump threatened a 100% tariff on Chinese goods last week, which sent markets tumbling.
- The White House is trying to reassure markets while still pressuring China over its new export controls.
- Analysts believe the most likely outcome is that both sides will pull back and extend the current tariff truce.
The Trump administration is signaling it’s open to a deal with China to calm the latest flare-up in trade tensions. Still, it’s also warning that Beijing’s recent export controls are a major barrier to any talks. The mixed messages from Washington come after a chaotic week that saw President Trump threaten a 100% tariff on Chinese goods, sending global markets into a tailspin.
In a social media post on Sunday, President Trump struck a surprisingly conciliatory tone. “Don’t worry about China, it will all be fine!” he wrote, adding that the U.S. “wants to help China, not hurt it!!!” This was a sharp reversal from his furious threats on Friday, when he said he would add the massive new tariffs and restrict U.S. software exports starting on November 1.
Vice President JD Vance also walked a fine line, calling on Beijing to “choose the path of reason” while also insisting that the U.S. has “far more cards” to play if the trade fight escalates.
The administration’s weekend comments seem designed to reassure spooked financial markets that a full-blown trade war isn’t inevitable, while still maintaining pressure on China to back down from its new export controls on rare earth materials.
Goldman Sachs economists said the situation is now more unpredictable than ever. “The most likely scenario seems to be that both sides pull back on the most aggressive policies and that talks lead to a further — and possibly indefinite — extension of the tariff escalation pause,” they wrote.
