As trade tensions between China and the U.S. escalate, markets remain volatile while President Trump threatens to reimpose suspended tariffs within weeks, sending ripples through the global economy.

At a Glance

• China officially denied any ongoing trade negotiations with the U.S., calling claims of progress “baseless rumors”
• Stock markets have stalled amid growing uncertainty, with major companies like PepsiCo and American Airlines warning about potential impacts
• Trump plans to set new tariffs in coming weeks unless countries like China and the EU change their trade practices
• The U.S. dollar has weakened against major currencies as investors react to trade uncertainty
• Trump indicated he will exempt some car parts from China from tariffs while maintaining a 25% tariff on foreign-made vehicles

China Denies Trade Talks as Markets React

China’s Ministry of Commerce has issued a clear statement shutting down rumors of ongoing negotiations with the United States. The announcement comes at a critical moment as investors hoped for signs of de-escalation in the trade conflict that has now seen tariffs reach 145% on some Chinese imports to America, while China maintains 125% duties on certain American goods. Financial markets have responded with hesitation, with the S&P 500 showing limited movement following a week of volatility triggered by President Trump’s comments on trade.

“There are currently no economic and trade negotiations between China and the United States, and any claims about progress in China-U.S. economic and trade negotiations are baseless rumors without factual evidence.”, said He Yadong.

The harsh stance from Beijing was further reinforced by Guo Jiakun from China’s Ministry of Foreign Affairs, who emphasized that China would not back down under pressure. Meanwhile, Treasury Secretary Scott Bessent has dismissed the possibility of unilateral tariff reductions, insisting that any easing of trade tensions would need to be mutual. This stalemate has left businesses and investors struggling to plan for an increasingly uncertain economic environment.

Corporate America Braces for Impact

Major American corporations are already adjusting their financial forecasts in response to the tariff threats. PepsiCo and pharmaceutical giant Merck have issued warnings that tariffs and economic uncertainty could significantly impact their future profits. American Airlines took an even more dramatic step by completely withdrawing its earnings forecast, citing the unpredictable economic climate. These moves by industry leaders signal growing concern about how prolonged trade tensions will affect American businesses and consumers.

Financial markets are showing signs of stress beyond equities. The U.S. dollar has weakened against major currencies including the euro, British pound, and Japanese yen. Meanwhile, the yield on 10-year Treasury bonds fell to 4.32 percent, reflecting investors seeking safer assets amid the uncertainty. Oil futures managed a slight recovery with Brent crude approaching $67 per barrel, but the overall market sentiment remains cautious as traders await clarity on trade policy.

Trump’s Tariff Strategy and Exemptions

President Trump has indicated he will set new tariffs in the coming weeks, suggesting that any deal with China depends entirely on their willingness to change trade practices. The administration suspended certain tariffs on April 9th, but that reprieve now appears to be ending unless significant concessions are made by trading partners. Both the European Union and China have strongly resisted American demands to alter their tax and subsidy regulations, creating a diplomatic impasse with significant economic consequences.

In a notable development for the automotive industry, Trump plans to exempt certain carmakers from some tariffs, specifically on car parts from China, while maintaining a 25% tariff on foreign-made vehicles. This targeted approach suggests the administration is attempting to balance protecting certain American manufacturing sectors while providing relief to others. The selective exemptions highlight the complex economic calculations behind the broader tariff strategy as the administration attempts to use trade policy to reshape global supply chains.

Global Market Response

International markets have shown mixed reactions to the escalating trade tensions. Asian markets diverged, with Japan’s index moving upward while Hong Kong and South Korea trended downward. European markets in Britain, France, and Germany have largely remained flat as investors assess the potential impact of renewed trade conflicts. The varied response across global markets reflects the complex and unpredictable nature of how tariffs will affect different economies and industries.

As the deadline for tariff decisions approaches, businesses are scrambling to adjust supply chains and financial projections. The uncertainty has created significant challenges for importers and exporters who cannot accurately calculate future expenses. With China firmly stating its unwillingness to negotiate under pressure and the Trump administration standing firm on demands for changes to trade practices, the path toward resolution remains unclear, leaving global markets and businesses bracing for potential economic turbulence in the weeks ahead.