Fed And China : Trump’s New Strategy Calms Markets

Markets only need a tremor to get carried away. This time, it was Donald Trump who rekindled the flame by suddenly softening his stance on two hot topics : the Federal Reserve and Chinese tariffs. “No plan to replace Jerome Powell”, he declared, breaking away from his previous harsh criticisms. He also opened the door to tariff relief on Chinese imports. Two calming gestures that immediately boosted global financial markets, which are in search of reassuring signals.

Markets and the Fed : a change of tone that reassures Wall Street

During a press briefing, Donald Trump eased tensions on two sensitive fronts. “I have no plan to replace Jerome Powell”, he stated, against all expectations.

This statement contrasts with his repeated attacks on the Fed chairman, whom he previously accused of sabotaging economic growth through an overly restrictive interest rate policy. The president’s conciliatory tone surprised many, especially as it was accompanied by an unexpected olive branch on the China trade issue.

Trump indeed mentioned a possible reduction in tariffs, which currently reach up to 145 % on some products from China. He explains :

We need to negotiate a deal that is fair for both countries.

This double shift had an immediate effect on the markets :

• The S&P 500 jumped 1.9 %, reflecting a rapid recovery of investor confidence ;
• The Dow Jones rose 1.4 %, led notably by industrial stocks ;
• The Nasdaq gained 2.8 %, fueled by hopes of a more predictable economic climate ;
• Japan’s Nikkei 225 closed up 1.7 %, while European stock markets followed suit with significant gains.

Investors welcomed a shift seen as a return to a form of predictability, after months of mixed signals.

Global economic consequences to anticipate

Beyond the immediate market reactions, these statements raise new questions about Donald Trump’s overall economic strategy. While the US president for a long time cultivated a rhetoric of economic confrontation with China and exerted unprecedented pressure on the Fed, his change of tone marks a turning point.

Some analysts see this as an effort to reassure the business community. For the International Monetary Fund, these political uncertainties remain a concern. The IMF has lowered its global growth forecasts for 2025 to 2.8 %, down from the initial 3.3 %, citing persistent risks related to trade tensions and unpredictable policies.

The independence of the Federal Reserve also remains a point of vigilance. While Trump claims he does not want to remove Jerome Powell, his past raises fears of future political pressures. This ambivalent stance could blur the signals sent to markets and international partners.

Moreover, a possible easing of tariffs does not guarantee resolution of structural imbalances in Sino-American trade. Some observers believe the Republican electorate might see this shift as a sign of weakness, while financial circles view it as a welcome pragmatism.

The question remains whether these calming gestures are part of a sustainable strategy or merely tactical adjustments. The coming months will allow an assessment of the coherence of this approach. For now, the markets have reacted positively, but economic fundamentals remain subject to deep structural tensions.