Trump: China tariffs should be 80%
Newsflash: Donald Trump has suggested that the US tariffs on Chinese goods should be 80%.
Posting on his Truth Social site, the US president says:
80% Tariff on China seems right! Up to Scott B.
Scott B is presumably Treasury secretary Bessent, who is due to meet with Chinese Vice Premier He Lifeng in Switzerland this weekend to discuss the trade war.
An 80% tariff would be a notable reduction on the 145% which Trump imposed last month, but would still make it significantly more expensive for US companies to import goods from China than before the trade war began.
Trump has also urged Beijing to open up its markets, posting:
CHINA SHOULD OPEN UP ITS MARKET TO USA — WOULD BE SO GOOD FOR THEM!!! CLOSED MARKETS DON’T WORK ANYMORE!!!
Reminder: trade data from China earlier today showed a drop in shipments to, and from, the US.
Key events
Closing post
Time to wrap up….
Donald Trump has floated cutting tariffs on China from 145% to 80% before a weekend meeting as he looks to de-escalate the trade war.
Top US officials are expected to meet a high-level Chinese delegation this weekend in Switzerland in the first significant talks between the two nations since Trump provoked a trade war with stiff tariffs on imports.
The US president wrote “80% Tariff on China seems right! Up to Scott B” on his social media account on Friday morning, referring to Scott Bessent, the treasury secretary.
Bessent and Jamieson Greer, the US trade representative, will meet their counterparts in Geneva in the most senior known conversations between the two countries in months, the Trump administration announced this week. It comes amid growing US market concern over the impact of the tariffs on the prices and supply of consumer goods.
Stock markets in Europe have rallied on hopes of a thawing between the two sides.
The latest trade data from China has shown that exports to the US, and imports the other way, both fell in April, as shipments to the rest of the world picked up.
While in the UK, Bank of England governor Andrew Bailey has said the UK now needs to do everything it can to rebuild its long-term trade relationship with the European Union.
He told the BBC:
“Having a more open economy to trade with the European Union … would be beneficial, because there has been a fall-off in goods trade with the EU over recent years.”
The Bank’s chief economist, Huw Pill, has predicted that US tariffs are not likely to have a “dramatic” effect on Britain’s economy.
In a presentation today, Pill said:
“The analysis in the baseline forecast does not suggest that there’s a dramatic shift in the behaviour of the UK economy on the back of these trade announcements and trade uncertainties.”
Switzerland and the United States have agreed to accelerate their trade talks and are determined to reach an agreement quickly, Swiss President Karin Keller-Sutter has revealed.
Keller-Sutter was speaking at a news conference after meeting US treasury secretary Scott Bessent and chief trade negotiator Jamieson Greer in Geneva, ahead of their talks with China this weekend.
Wall Street rises amid hopes of US-China trade war progress
Wall Street has opened a little higher, as traders grasp onto hopes of progress in the US-China trade war.
The main indices have all risen in early trading, as investors eye this weekend’s negotiations in Switzerland, and digest Donald Trump’s suggestion that China’s tariffs could be cut to 80%.
Here are the early moves:
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Dow Jones industral average: up 123 points or 0.3% at 41,491 points
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S&P 500: up 25 points or 0.45% at 5,689
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Nasdaq Composite: up 132 points or 0.75% at 18,060
That follows gains in Europe today, where Germany’s DAX index hit a new all-time high.
Hopes of a thawing in US-China trade tensions are boosting stocks, reports Fawad Razaqzada, market analyst at City Index:
Bullish momentum picked up for global stocks after reports emerged that the US is considering reducing tariffs on Chinese goods to below 60%, a significant pullback from the punitive 100%+ levies imposed earlier.
However, Trump has posted on his social account that the levy could be reduced to only 80%, which “seems right” according to him, although that it is up Scott Bessant ahead of the weekend talks with Beijing.
Meanwhile, China’s exports to the US have already taken a hit, with the latest data showing a marked slump. But the real damage from those tariffs is only just starting to show. Markets, though, are forward-looking—and any sign of easing tensions is enough to get investors back into risk assets, as we have seen in the last few weeks.
Australia’s Macquarie Group has snapped up a UK smart meter rental business.
Spain’s Iberdrola has agreed to sell its SP Smart Meters Assets – which it owns through Scottish Power – to Macquarie Group for almost £900m.
The sale to Macquarie, whose previous investments include now-troubled Thames Water, is expected to complete in the third quarter of the year.
Earlier today Macquarie also warned that global trade is under “the most intense pressure for decades”, as it reported a 5% increase in annual profits in the last year.
Donald Trump’s suggestion that tariffs on China should be cut to 80% may have disappointed some investors.
Earlier today, Bloomberg reported that the US had set a target of reducing tariffs below 60%, as a first step that they felt China may be prepared to match.
Trump: China tariffs should be 80%
Newsflash: Donald Trump has suggested that the US tariffs on Chinese goods should be 80%.
Posting on his Truth Social site, the US president says:
80% Tariff on China seems right! Up to Scott B.
Scott B is presumably Treasury secretary Bessent, who is due to meet with Chinese Vice Premier He Lifeng in Switzerland this weekend to discuss the trade war.
An 80% tariff would be a notable reduction on the 145% which Trump imposed last month, but would still make it significantly more expensive for US companies to import goods from China than before the trade war began.
Trump has also urged Beijing to open up its markets, posting:
CHINA SHOULD OPEN UP ITS MARKET TO USA — WOULD BE SO GOOD FOR THEM!!! CLOSED MARKETS DON’T WORK ANYMORE!!!
Reminder: trade data from China earlier today showed a drop in shipments to, and from, the US.
European Commission President Ursula von der Leyen has suggested she could visit Washington to meet President Donald Trump to discuss trade negotiations – but, crucially, once a “concrete” trade package is on the table.
Speaking in Brussels today, von der Leyen said:
“If I go to the White House, I want to have a package we can discuss.
It has to be concrete, and I want to have a solution that we both can agree on. That is the work we are doing right now.”
More here.
An index of fear in European stock markets has dropped to its lowest level since just before Donald Trump’s ‘Liberation Day’ tariff announcement at the start of April.
The Euro Stoxx Volatility Index has fallen by 2% today to around 20 points, its lowest since 28 March.
In the days after Trump kicked off his trade war the index had hit a three-year high over 50 points, before falling back after the US president paused his global tariffs for 90 days.
Britain’s new trade deal with the US could lead to more foreign investment into the UK, explains Professor Costas Milas, of the University of Liverpool’s management school:
However “incomplete” the new US-UK deal might look and be, it signals smooth long-term business relationships between the U.S. and the UK. In fact, foreign car companies and those involved in production of steel and aluminum might be tempted to increase foreign direct investments (FDIs) in the UK to get indirect access to the U.S. market.
As I explained in a recent co-authored paper, additional FDIs will translate into higher wages and productivity in the UK. The US-UK deal is reasonably good news.
Goldman Sachs are sticking with their view that the Bank of England will cut interest rates sharply in the second half of this year, and in early 2026.
Following yesterday’s quarter-point rate cut to 4.25%, in a split decision, Goldman don’t expect another cut in June.
But it then expects cuts at every meeting from August until next March, which would mean six reductions, reducing rates by 1.5 percentage points.
Goldman says:
Given today’s signals towards a continued quarterly pace of cuts, we no longer expect the MPC to cut Bank Rate at the June meeting, as this would likely require material downside surprises in the near-term data. That said, we maintain our view that a weaker economy—including softer growth, pay gains and inflation—will push the MPC into faster rate cuts in H2.
We therefore now expect a pause in June but maintain our forecast for sequential 25bp rate cuts from August to an unchanged terminal rate of 2.75% in March 2026 (versus February before).
German manufacturer Siemens Energy (+2.7%) is leading the risers on the DAX this morning.
It’s followed by pharmaceuticals group Merck Group (+1.86%) and carmaker BMW (+1.8%), two companies exposed to the US trade war, who would benefit from an easing of tensions.
Back in Reykjavík, Bank of England governor Andrew Bailey has pointed out that the US-UK trade deal still leaves tariffs on most British exports to the US higher than before April.
Bailey also reiterated that the deal was good news, saying:
“It’s good news in a world where it will leave the effective tariff rate higher than it was before all of this started.”
Jochen Stanzl, chief market analyst at CMC Markets, has explained why Germany’s DAX share index has the potential to push higher, setting new record highs:
The framework established by Trump’s London pact is essentially a loosely defined intention that primarily provides the U.S. president with an exit strategy: it allows him to claim later that he does not need to reactivate the reciprocal tariffs. The markets celebrate this agreement not because it shines in every detail but because this rough framework might be sufficient to maintain the temporary suspension of countersanctions permanently. The DAX continues its upward trend, with the record high tantalizingly close.
With the Friedrich Merz government poised to unveil its Agenda 2030, it is a good moment to examine the current state of the DAX. Analysts anticipate an average earnings growth of six percent over the next twelve months, followed by almost thirteen percent in the subsequent year. The current price-to-earnings ratio (P/E ratio) of around 17 suggests that the index could rise to 24,700 points solely based on expected earnings growth over the next twelve months, eventually reaching 27,900 points in two years—assuming investors continue to accept a relatively high valuation level.
From a political and economic standpoint, this potential arises in two ways: Firstly, the prospect of expansive fiscal programs—such as increased spending on infrastructure, energy, and defense—will drive revenues and profits for DAX-listed companies. Secondly, the gradual normalization of monetary policy following the inflation surge in recent years is likely to lower interest rates, further supporting stock prices.
Andrew Bailey also warns that central bankers will continue to face a “challenging” and unpredictable environment, adding to the challenge of setting interest rates.
He tells his audience in Reykjavík:
We must learn the lessons from the difficulties we have faced as policymakers and forecasters over this period. Our models, infrastructure and analytical frameworks were challenged by the sheer scale and unpredictability of the shocks that hit us. Underlying issues were revealed under the stress of these big unforeseeable events. Forecasting became much more difficult, irrespective of the specific models and approaches used.
We need no reminder that the global economic environment is likely to continue to be challenging – and less predictable – than it was in the past. So we need to adapt and develop to ensure that our processes are nimble and robust, and that our monetary policy decisions are communicated effectively, while ensuring that we continue to act methodically in response to inflationary pressures.
