Markets rally sharply after Trump softens his stance on China tariffs, Fed Chair Powell

US stocks surged on Wednesday after a Wall Street Journal report revealed the White House is considering significant cuts to China tariffs in a bid to de-escalate the trade war. A senior official said duties could drop to 50–65%, down from the current 145% on some imports.

Markets also responded positively to President Trump’s unexpected reassurance that he has “no intention” of removing Federal Reserve Chair Jerome Powell, despite his earlier public attacks. Just days ago, Trump had labeled Powell a “major loser” and hinted at an early termination.

By 09:46 a.m. ET, the Dow was up 2.6%, while the Nasdaq Composite surged 3.7% and the S&P 500 climbed 3%, building on Tuesday’s massive 1,000-point Dow rally. Investors viewed the twin signals—a retreat from combative China policy and an olive branch to Powell—as a step toward stability after weeks of heightened uncertainty.

According to a Wall Street Journal report, the US government is contemplating a reduction in tariffs on Chinese imports as a way to ease tensions with Beijing. A White House official mentioned in the report suggested that the China tariffs could decrease to a range of 50%-65%. 

Karl Haeling from LBBW noted that these developments have been welcomed by the markets. However, Haeling cautioned that President Trump's strong language on trade could resurface in the future.

Trump’s hint that tariffs on Chinese imports would be lowered, while still “not zero,” marked a notable shift in tone and added momentum to the market rally.