Just weeks after shaking the global economy with 145% tariffs on Chinese imports, President Trump is dialing it back—at least rhetorically. On Friday, he posted on social media that an “80% tariff on China seems right.” But this wasn’t a policy reversal. It was classic Trump: a high-stakes feint before negotiations begin.
The Geneva meeting between U.S. Treasury Secretary Scott Bessent and China’s economic chief He Lifeng kicks off tomorrow. It marks the first formal sit-down aimed at calming tensions in the world’s most consequential trade relationship.
But despite the softer tone, markets didn’t cheer. Stocks barely budged. Why? The law of diminishing returns. After Trump fired off the 145% tariff shockwave, dialing it back to 80% doesn’t register as a de-escalation—it still screams uncertainty. Without dramatic progress in Geneva, don’t expect the markets to rally next week. In fact, a lack of breakthrough could trigger a fresh downturn.
Technically speaking, the S&P 500 (SPY) and Nasdaq 100 (QQQ) are running into major resistance:
- Daily chart: butting up against the 200-day moving average—a long-term trend line watched closely by institutional investors. Rejections here often signal weakness.
- Weekly chart: facing the 50-week moving average, another critical level. Both charts suggest a market losing momentum, and unless bulls get a solid catalyst, we may see a rollover.
That catalyst won’t likely come from Geneva—at least not yet. Trump probably won’t give up his biggest card so early in the game. China is his main trade lever, and easing up too soon would risk looking weak. Beijing would likely seize the opportunity, and Trump—especially in an election year—can’t afford to appear like a pushover.
Strategically, Trump wants to ink deals with other countries first, building leverage and isolating China. The UK deal—finalized just this week—cut tariffs on cars and metals in exchange for U.S. beef and other exports. More such bilateral agreements are in progress.
As of now, the U.S. has over 20 trade agreements in place with countries like South Korea, Israel, Australia, and most of Latin America (including CAFTA-DR countries and USMCA). But many are being revisited or renegotiated under Trump’s “reciprocal tariff” doctrine. New deals could help Trump argue that he’s rebuilding a “fair” trade network—before bringing China back to the table.
Meanwhile, China still holds strong cards:
- Rare earths monopoly (critical for U.S. tech and defense),
- $775B in U.S. Treasuries,
- Supply chain workarounds via Vietnam and Mexico,
- Control over U.S. market access for companies like Apple and Tesla, and
- Currency flexibility to offset tariff pressures.
So while Geneva may offer symbolic handshakes, real change likely won’t come until both sides feel more pain—or see more opportunity.
Bottom line:
The 80% tariff post was never about peace—it was about posturing. Unless something big breaks out of Geneva, this rally is running out of fuel. And if the market sees no substance? Get ready for a fall.