Trump Hints at 55% China Tariffs. “OUR DEAL WITH CHINA IS DONE”

S&P 500 futures went up before the trading session began after the recent inflation print came out slightly below expectations. Year-over-year CPI came in at 2.4%, which is 0.1% less than expected. Tariffs are yet to lead to notably higher inflation, so the stock market was set to start buying in with more enthusiasm.

However, the stock market did not open as strongly after President Donald Trump posted on Truth Social, “OUR DEAL WITH CHINA IS DONE, SUBJECT TO FINAL APPROVAL WITH PRESIDENT XI AND ME. FULL MAGNETS, AND ANY NECESSARY RARE EARTHS, WILL BE SUPPLIED, UP FRONT, BY CHINA. LIKEWISE, WE WILL PROVIDE TO CHINA WHAT WAS AGREED TO, INCLUDING CHINESE STUDENTS USING OUR COLLEGES AND UNIVERSITIES (WHICH HAS ALWAYS BEEN GOOD WITH ME!). WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%. RELATIONSHIP IS EXCELLENT! THANK YOU FOR YOUR ATTENTION TO THIS MATTER!”

In the above quote, the deal supposedly being done with China is certainly great news, and would’ve pushed up the market even more. But what caught Wall Street off guard was the “55%” figure. This figure is even higher than the current tariff on China during the trade truce, which is at 30%, and it would also leave tariffs of 10% on the Chinese side unchanged after the trade truce. China is unlikely to agree to it, but this post has led to some disappointment. Most expected general tariffs to be in the ballpark of 10% to 25% for China.

Here’s a market update as of 10:45 AM (ET) today.

• The S&P 500 is up 16 points, or 0.27%.
• The Nasdaq Composite is up 69.65 points, or 0.36%.
• The Dow Jones Industrial Average is up 146.12 points, or 0.34%.

Macros

Inflation is the most important macro figure today, and it came in below expectations, which is great for the market. The tariff scare in the past few months caused many to believe that tariffs would cause a sharp increase in inflation. This has not yet happened, and many firms that forecasted as such have ended up reducing inflation expectations themselves.

• CPI year-over-year came in at 2.4% vs. 2.5% estimated.
• Core CPI year-over-year came in at 2.8% vs. 2.9% estimated.
• CPI month-over-month at 0.1% vs. 0.2% estimated.
• Core CPI month-over-month at 0.1% vs. 0.3% estimated.
• EIA Crude Cushing Inventories came in at -0.403 million.
• EIA Gasoline Inventories at 1.504 million vs. the 0.753 million forecast.
• EIA Distillate Inventories at 1.246 million vs. the 0.7 million forecast.
• EIA Crude Oil Inventories at -3.644 million vs. the -2.6 million forecast.

Comments From Bessent

Here are some snippets of comments the U.S. Treasury Secretary Scott Bessent made today:

• China needs to be a reliable partner in trade negotiations.
• If China upholds its end of the initial Geneva trade agreement, a big, beautiful rebalancing of the U.S. and Chinese economies is possible.
• The Trump administration has cut IRS expenses and planned spending on technology by $2 billion.
• The May U.S. budget receipts were up 14.7% over the year-ago period, after April receipts increased 9.5%.
• I see non-inflationary growth from tax cuts.

Other Assets

• Gold Futures are up 0.35% to $3,355.1 per ounce.
• Crude Oil Futures are up 2.2% to $66.4.
• Natural Gas Futures are flat at $3.5.
• Bitcoin is down 0.26% to $109,943.

The image featured at the top of this post is ©Openverse.