After several days of sharp swings, U.S. stock markets were subdued Friday as China signaled that it wouldn’t increase tariffs on U.S. goods beyond hiking customs duties to 125 percent.
The S&P 500, Dow Jones Industrial Average and Nasdaq composite index opened down less than 1 percent, suggesting that traders expect a calmer day on Wall Street after China’s assurance that it would ignore any further U.S. efforts to “play the tariff numbers game.”
Further increases “no longer have any economic significance” because the current levels make U.S. exports to China not financially viable, China’s State Council said in a statement, adding that imposing higher tariffs would make the United States a joke. The new Chinese tariffs take effect Saturday.
The Chinese action comes at the end of a volatile week for markets, as traders reacted to whipsawing tariff policies. The S&P 500 posted its biggest one-day jump since 2008 on Wednesday, but saw much of those gains erased by midday Thursday.
China announced its latest tariff increase after most Asian markets closed. Ahead of the announcement, Hong Kong’s Hang Seng Index and China’s Shanghai composite index ended the day slightly higher. Taiwan’s bourse logged a 2.5 percent gain. Japan’s Nikkei 225 lost almost 3 percent.
Japanese Prime Minister Shigeru Ishiba said Friday that Tokyo would try to address U.S. tariffs affecting the auto and steel industries, while South Korean Finance Minister Choi Sang-mok said the government would provide $6.2 billion in assistance to businesses exporting to the United States.
Taiwanese President Lai Ching-te wrote in an op-ed this week that Taipei would seek to buy additional U.S. arms and expand investments in the United States.
The U.S.-China trade war could hurt consumers on both sides, experts said. The average U.S. household will face a loss of $4,700 at last year’s price levels when accounting for Trump’s tariffs, which will also cut U.S. gross domestic product by around 1.1 percent, according to an April 10 estimate from the Budget Lab at Yale University. And while a defiant China has repeatedly vowed that it will not cave to Trump’s tariffs, Beijing is struggling with a property market slump, high youth unemployment and weak domestic spending.
Corporate leaders in the United States have said they are prepared for an economic slowdown if trade tensions continue.
“We support the administration’s willingness to look at barriers to fair trade for the United States, though there are certainly risks associated with such significant actions,” Wells Fargo chief executive Charlie Scharf said Friday, as the financial services company reported its first-quarter earnings. “Timely resolution which benefits the U.S. would be good for businesses, consumers and the markets.”
JPMorgan Chase CEO Jamie Dimon said the economy faces considerable turbulence, with possible upsides from domestic efforts to change tax policy and deregulate facing off with the potential downsides wrought by “tariffs and ‘trade wars,’ ongoing sticky inflation, high fiscal deficits and still rather high asset prices and volatility.”
Major European markets fell slightly after opening Friday, following rebounds the previous day.
French President Emmanuel Macron said that while the 90-day reprieve announced by Trump shows the door remains “open to negotiation,” the pause is “fragile.”
“Fragile, because the 25 percent tariffs on steel, aluminum and automobiles and the 10 percent tariffs on all other products are still in place,” Macron wrote on X on Friday. “Fragile, because this 90-day pause means 90 days of uncertainty for all our businesses, on both sides of the Atlantic and beyond.”
The French leader said Europe should “continue to work on all necessary countermeasures.”
Speaking ahead of an informal meeting with his European counterparts, German Finance Minister Jörg Kukies said Friday that the United States “has to be aware that if the negotiations don’t work, we will have another discussion around the response mechanisms.”
