WASHINGTON DC – In a notable shift in tone, US President Donald Trump on Tuesday signaled a willingness to dial down tensions with both China and Federal Reserve Chairman Jerome Powell, amid global market jitters and warnings from top economists.
Speaking from the Oval Office, Trump stated he had “no intention of firing” Powell—whom he has publicly lambasted in recent weeks—though he said he would prefer a “more active” approach from the central bank on cutting interest rates.
The US President also offered an olive branch to Beijing, expressing optimism about securing a trade deal and suggesting that the steep tariffs he has imposed on Chinese goods could be lowered—though not eliminated.
Trump has raised tariffs on Chinese imports by as much as 145%, a move designed to push US companies to bring manufacturing and jobs back home. But the policy has sparked retaliation from China and roiled global financial markets.
The President’s apparent change of tone comes just days after reports surfaced that he was exploring ways to remove Powell—a move that would mark unprecedented interference with the independence of the Federal Reserve.
Markets reacted positively to Trump’s remarks. The S&P 500 jumped 2.5% on Tuesday, while the Nasdaq rose 2.7%.
Most Asian markets followed suit on Wednesday, with Japan’s Nikkei gaining nearly 2% and Hong Kong’s Hang Seng climbing 2.2%. However, China’s Shanghai Composite was mostly flat.
Even as markets bounce back, the broader economic picture remains cloudy. The International Monetary Fund (IMF) on Tuesday downgraded its forecast for US economic growth—citing mounting uncertainty from Trump’s tariffs as a key risk.
Trump’s aggressive tariff strategy has drawn criticism from both domestic and international observers.
US Treasury Secretary Scott Bessent said the escalating trade war was “unsustainable,” and emphasized the need for de-escalation.
Meanwhile, China has responded with its own tariffs—slapping up to 125% duties on US products and warning of a protracted trade battle if the US doesn’t pull back. In an editorial, China’s state-run Global Times said the US was beginning to see that its tariffs may be hurting its own economy more than China’s.
Despite the friction, Trump said he intended to be “very nice” in future negotiations with Beijing.
Still, economists caution that the tug-of-war between tariffs and rate cuts could backfire—fueling inflation while stifling growth.
