Washington/Islamabad: President Donald Trump reassured markets that he had no plans to fire Jerome Powell, the chair of the United States Federal Reserve, and indicated a significant reduction in tariffs on China, which had been a source of concern for global markets.
Trump’s previous remarks criticizing Powell had raised fears that he might oust the Fed chair, adding to market uncertainty. However, on Tuesday, Trump clarified his stance, stating, “I have no intention of firing him.”
Trump continued by expressing his desire for Powell to take a more active role in reducing interest rates, suggesting, “It’s a perfect time to lower interest rates. If he doesn’t, is it the end? No.”
Since his return to the White House in January, Trump has implemented hefty tariffs, including a 145% tariff on various Chinese goods.
These tariffs were initially imposed over concerns about China’s involvement in the fentanyl supply chain and later expanded due to perceived unfair trade practices by Beijing.
In response, China has imposed its own set of tariffs on US products, totaling 125%.
However, Trump acknowledged that the 145% tariff rate was excessively high and indicated that it would “come down substantially,” although he clarified that it would not drop to zero.
“They will not be anywhere near that number,” Trump said, adding that “ultimately, they have to make a deal because otherwise, they’re not going to be able to deal in the United States.”
These comments follow Treasury Secretary Scott Bessent’s remarks at a closed-door event, where he stated that the tariffs amounted to a de facto trade embargo but expressed optimism about a de-escalation in the near future.
This statement, along with Trump’s indication of tariff reductions, helped to buoy market confidence, with Wall Street indexes rising following the news. Asian markets also saw gains the next day.
Bessent emphasized that although much work remains to be done with Beijing, the aim is not to sever ties with China but to push for fair trade practices and to help China rebalance its economy.
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He also noted a recent slump in trade between the US and China, particularly in container bookings, a sign of the toll that escalating trade tensions have taken on bilateral commerce.
White House Press Secretary Karoline Leavitt also addressed the issue, stating that the administration is “doing very well” in regard to potential trade negotiations with China.
“The president and the administration are setting the stage for a deal,” she said, expressing confidence that “the ball is moving in the right direction.” However, China has not yet confirmed that formal negotiations are underway.
As global financial leaders and central bankers gather in Washington for the Spring Meetings of the International Monetary Fund and World Bank, the outcome of US-China trade talks remains a key topic of interest.
China’s Foreign Minister Wang Yi spoke with his British and Austrian counterparts on Tuesday, urging the UK and the European Union to cooperate with Beijing to protect international trade.
Meanwhile, Japan is reportedly considering sending a trade envoy to Washington next week, with discussions about potential concessions to ease tensions with the US.
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In a related move, Japan’s Sumitomo Rubber, which recently acquired the Dunlop brand, announced plans to increase tire prices by up to 25% in the US and Canada starting in May.
