Wall Street Rallies as Trump Signals Softer Stance on China Tariffs

By Joseph, Contributor
April 24, 2025 – 12:00 PM CST, Milwaukee, WI

Wall Street experienced a significant rally, with the Nasdaq climbing 2.5% and the S&P 500 gaining 1.8%, driven by optimism over President Donald Trump’s signals of a softer stance on proposed tariffs against China. The announcement, made via a post on Truth Social, suggested a potential reduction from the previously floated 145% duties, easing fears of a full-blown trade war that had rattled markets.

Trump’s initial tariff plan, a cornerstone of his second-term economic agenda, targeted Chinese imports to address trade imbalances and protect U.S. industries. However, the proposed 145% tariffs, announced earlier in 2025, sparked concerns about inflation, supply chain disruptions, and retaliatory measures from Beijing. The prospect of de-escalation lifted investor sentiment, particularly in tech and consumer goods sectors heavily reliant on Chinese manufacturing.

The Nasdaq’s surge was led by tech giants like Apple and Nvidia, whose supply chains depend on Chinese components. Apple’s stock rose 3.2%, reflecting relief over potential tariff relief, while Nvidia gained 2.8% amid hopes of stable semiconductor trade. The broader market rally also benefited smaller-cap stocks, with the Russell 2000 index up 1.5%, signaling broad-based confidence.

Trump’s shift appears driven by domestic and international pressures. A lawsuit filed by 12 U.S. states in the U.S. Court of International Trade has challenged the legality of his tariff policies, citing economic harm. Additionally, China’s threats of reciprocal tariffs on U.S. agricultural and energy exports raised fears of losses for American farmers and LNG producers, key constituencies for Trump’s base.

Posts on X captured the market’s reaction, with one user noting, “Nasdaq jumping after Trump’s China tariff backtrack—smart move or weak retreat?” The polarized sentiment reflects ongoing debates over Trump’s trade strategy, with some praising his pragmatism and others criticizing it as a betrayal of his “America First” rhetoric. The post highlights the high stakes of his policy pivot.

Economists warn that while the softened stance may stabilize markets short-term, uncertainty persists. The U.S.-China trade deficit, which reached $419 billion in 2024, remains a flashpoint. Trump’s negotiations, led by Treasury Secretary Scott Bessent, aim to secure concessions from Beijing, such as increased purchases of U.S. goods, but China’s economic slowdown complicates these talks.

The rally also reflects broader market dynamics. The Federal Reserve’s recent decision to hold interest rates steady, coupled with cooling inflation data, has bolstered investor confidence. However, concerns linger about the long-term impact of Trump’s trade policies, particularly if negotiations falter and tariffs are reimposed after the 90-day pause announced for other trade partners.

Retail and consumer goods stocks, including Walmart and Target, also saw gains, as lower tariffs could ease price pressures on imported goods. Walmart’s stock rose 2.1%, with analysts citing reduced risks of cost pass-through to consumers. The sector’s performance underscores the interconnectedness of trade policy and domestic inflation, a key voter concern.

Globally, the signal of de-escalation with China has ripple effects. European markets, including Germany’s DAX and France’s CAC 40, rose 1.2% and 1.4%, respectively, as fears of a global trade war subsided. The EU, itself navigating tariff exemptions with the U.S., benefits indirectly from a more stable U.S.-China trade environment.

The pharmaceutical sector, a focal point of tariff concerns, saw modest gains. Companies like Pfizer and Moderna, reliant on Chinese raw materials, rose 1.8% and 1.6%, respectively. Industry experts have warned that high tariffs could drive up drug prices, a politically sensitive issue that likely influenced Trump’s recalibration.

Trump’s softer stance also intersects with his foreign policy goals. His push for a Ukraine ceasefire relies on pressuring China, a major buyer of Russian oil, to reduce support for Moscow. By easing tariff threats, Trump may hope to gain leverage in these talks, though analysts question whether China will make significant concessions given its own economic challenges.

The market rally masks underlying risks. China’s property sector crisis and slowing GDP growth, projected at 4.5% for 2025, limit its ability to absorb U.S. exports. Retaliatory measures, such as restrictions on rare earth exports critical to U.S. tech industries, remain a concern if negotiations sour.

Domestic political dynamics further complicate Trump’s strategy. With midterm elections approaching, he faces pressure to deliver economic wins without alienating voters hit by inflation. The state-led lawsuit and lobbying from business groups like the U.S. Chamber of Commerce highlight the domestic backlash against his initial tariff plans.

The energy sector, another tariff target, saw mixed performance. While ExxonMobil and Chevron gained 1.3% and 1.1%, respectively, concerns persist about China’s potential retaliation against U.S. LNG exports. India’s offer to scrap duties on U.S. LNG, reported on April 24, could offset some risks, but global energy markets remain volatile.

Analysts view the rally as a short-term reprieve rather than a resolution. The 90-day tariff pause for other partners, announced concurrently, suggests Trump is buying time to refine his strategy. Failure to secure meaningful trade deals could reignite market volatility, particularly if China imposes counter-tariffs or escalates tensions over Taiwan.

The rally’s sustainability depends on the outcome of U.S.-China talks. Trump’s deal-making rhetoric, a hallmark of his presidency, faces a critical test. Securing commitments from Beijing without compromising U.S. interests will require diplomatic finesse, a challenge given his administration’s combative trade rhetoric.

Ultimately, Wall Street’s rally reflects cautious optimism but not certainty. Trump’s softened stance on China tariffs has averted immediate economic fallout, but the path forward remains fraught. As markets await clarity on trade negotiations, the interplay of geopolitics, domestic politics, and global economics will shape the trajectory of this pivotal moment.