Tariff Tango: Trump’s 90-Day China Shuffle and the Market’s Manic Monday

The markets are having a collective orgasm this morning, with the Dow rocketing 1,000 points on news that Trump and China have agreed to a 90-day tariff vacation. It’s like watching a junkie get their fix after weeks of withdrawal – pure euphoria with zero concern for the inevitable crash.

The “Historic” Deal: A Temporary Reprieve from Mutually Assured Destruction

Let’s dissect this “historic trade win” (as the White House propaganda machine is calling it):

• • US tariffs on Chinese goods: Slashed from a punitive 145% to a merely painful 30%

  • Chinese tariffs on US goods: Cut from 125% to 10%

  • Duration: 90 days, starting May 14th

  • Fentanyl tariffs: The 20% tariffs from February/March remain in place

Treasury Secretary Scott Bessent, Trump’s designated bagman in Geneva, was refreshingly honest when he called this “just a pause” rather than a major policy shift. The April 2nd baseline tariff for China was 34%, so we’ve actually seen a modest reduction to 30% – hardly the second coming of Adam Smith.

The Characters in This Economic Theater

Donald “Art of the Deal” Trump: Our protagonist spent the weekend tweeting about “GREAT PROGRESS” and a “total reset” while his negotiators were still in the air. He’s like a poker player who shows his hand, then wonders why he lost. His social media suggestion to reduce tariffs to 80% before talks even started was either 4D chess or a negotiating face-plant, depending on your political persuasion.

Scott “Just a Pause” Bessent: Trump’s Treasury Secretary, who was supposedly elevated in Chinese officials’ estimation by Trump’s social media endorsement. The former hedge fund manager is playing the role of adult in the room, emphasizing that this isn’t a full policy shift but a tactical retreat.

Jamieson Greer: The US Trade Representative who’s been tasked with making Trump’s economic fever dreams into coherent policy. He claims the Chinese “clearly came prepared to negotiate,” which in diplomatic speak means “they knew we were desperate for a win.”

He Lifeng: China’s Vice Premier, who spent the weekend in closed-door negotiations, likely wondering if the Americans would change their minds again before the ink dried.

The Market’s Manic Response

Wall Street is partying like it’s 1999:

• • Dow futures up over 2%

  • S&P 500 futures up nearly 3%

  • Nasdaq futures soaring more than 3.5%

  • Hong Kong’s Hang Seng closed 3% higher

  • Gold prices dropping as risk appetite returns

This reaction comes after a brutal stretch where the S&P 500 nearly entered bear market territory, declining 19% between February 19th and April 8th. Tech stocks have been particularly volatile, dropping 11.2% in early April before rallying 11.8% after the April 9th pause on reciprocal tariffs.

The Bigger Economic Picture

Beyond the tariff drama, the economic landscape remains complex:

• • Labor market resilience: March job growth exceeded expectations at +228k, followed by April’s solid +177k. Unemployment remains steady at 4.2%.

  • Retail sales rebounded: Consumer spending increased 1.4% in March, beating forecasts.

  • Inflation cooling: CPI fell to 2.4% in March, the lowest since March 2021.

  • Corporate earnings: With 180 firms reporting, 73% beat estimates, with earnings 10% above expectations.

The seasonal “Sell in May and go away” adage is being tested by unprecedented volatility. As Bespoke Investment Group co-founder Paul Hickey noted, “In a benign environment, you would expect to see your positive seasonal trends, but, especially after the last six weeks, who knows what we’re going to be talking about.”

What Trump Really Wants

Strip away the bluster, and Trump’s agenda becomes clearer:

1. 1. “Decoupling for strategic necessities“: Bessent explicitly stated they want to reduce reliance on China for critical medicines, semiconductor chips, and steel. This isn’t about free trade; it’s about economic nationalism.

   2. Political wins before November: With his approval rating at a 70-year low for a president at this point in their term, Trump needs economic victories to sell to voters.

   3. Leverage over allies: The UK recently reached a preliminary trade deal, likely setting a pattern where the 10% baseline tariff applies to all nations. Trump is creating a system where every country must individually negotiate with him and he’s already gotten himself a plane out of the deal – so why not?

   4. Market manipulation: The timing of trade announcements has consistently moved markets, creating patterns that benefit those with advance knowledge.

The 90-day window conveniently pushes the next tariff decision past the summer, when Trump’s promised “pro-growth policies” are expected to take center stage.

The Bottom Line

This isn’t a trade deal; it’s a theatrical intermission. Both sides needed a breather from their mutually destructive policies, but the fundamental tensions remain unresolved. The markets are celebrating a temporary ceasefire in a war that’s far from over.

For investors, the message is clear: Volatility is the new normal. When trade policy can flip 180 degrees based on a weekend of talks, long-term planning becomes nearly impossible. The traditional seasonal indicators are being crushed under the weight of tariff uncertainty and monetary policy chaos.

As we ride this market rollercoaster, remember that Trump’s economic policy isn’t about coherent strategy-it’s about creating leverage, manufacturing wins, and maintaining the appearance of control. The 90-day clock is ticking, and when it expires in mid-August, we’ll likely be right back where we started: hostages to the whims of a president who views global trade as a zero-sum game where America can only win if someone else loses.

Buckle up, buttercup. This ride is just getting started.