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Investing.com -- President Trump recently hinted at a possible 80% tariff on China in a social media post. The statement, which was made on Truth Social, was vague and open to interpretation, causing confusion among investors. The President’s comment led to a negative market reaction, with S&P 500 futures dropping from 0.4% to 0.1%.
In his post, Trump stated, "Trump: 80% Tariff on China seems right! Up to Scott B," referring to U.S. Treasury Secretary Scott Bessent. It remains unclear whether Trump intends for the 80% tariff to be a long-term measure, a temporary reduction from the current 145% tariff, or if he is granting Bessent authority to negotiate lower tariffs with China.
An 80% tariff would be significantly lower than the current 145% tariff imposed on many Chinese goods. However, even this reduced rate could be seen as a barrier to trade.
Since assuming office in January, Trump has increased levies on imports from China to 145%, adding to the duties he imposed during his first term and those introduced by the Biden administration. In response, China has imposed export restrictions on some rare earth elements and increased tariffs on U.S. goods to 125%. Additional levies have been placed on select products, including soybeans and liquefied natural gas.
In an effort to resolve these trade disputes, Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer are set to meet with Chinese economic tsar He Lifeng in Switzerland. These talks, which have been described by Trump administration officials as a step towards de-escalating tensions with China, are due to begin on Saturday.
Early reports from Bloomberg suggest that the Trump administration is considering a substantial tariff reduction during these talks. Sources familiar with the preparations for the talks have indicated that the U.S. side is targeting a tariff reduction below 60% as a first step, which they believe China may be willing to match.
However, these talks are likely to focus more on airing grievances than on finding solutions. The situation remains fluid, and there is no certainty that tariff levels will decrease in the near term.
In addition to the tariff issue, the U.S. also hopes to secure the removal of China’s export restrictions on rare earths. Progress has also been made on the issue of fentanyl, with separate talks potentially taking place soon to discuss reducing Chinese exports of the ingredients used to make the opiate.
In a separate social media post, Trump urged China to open up its market to the U.S., stating, "CHINA SHOULD OPEN UP ITS MARKET TO USA — WOULD BE SO GOOD FOR THEM!!! CLOSED MARKETS DON’T WORK ANYMORE!!"
On Thursday, as he announced the outlines of a U.S.-UK trade deal, Trump expressed optimism about the upcoming talks with China, telling reporters, "You can’t get any higher — it’s at 145%, so we know it’s coming down. I think we are going to have a good weekend with China.”