Trump withdraws threat - Wall Street celebrates with records!

Trump withdraws threat - Wall Street celebrates with records!

President Donald Trump has withdrawn his impending intent to dismiss the chairman of the Federal Reserve, Jerome Powell. Despite his criticism of Powell's hesitant interest rate reduction, Trump said that he had no intention to stop Powell. This turn in political rhetoric came at a time when the US exchanges rose remarkably, which indicates a facilitation of investors.

According to Trump's comments, the US futures rose sharply, with the S&P 500 and NASDAQ-100 contracts increasing by over 1.70% and 1.90%. The US dollar also recorded an increase of more than 1% compared to the most important currencies. Wall Street experienced an upswing after the Finance Minister Scott Bessent described a trade policy in conflict with China as "not portable" and pointed out to an upcoming agreement.

stock exchange reaction and tariff policy

At the end of the trading day, the S&P 500 closed over 2.5%, while the Nasdaq added more than 2.7%. The Asian markets also recorded an increase, with Japan's Nikkei 225 and South Korea's Kospi climbed by about 2% and 1%. This positive market reaction follows Trump's announcement that the high tariffs on Chinese goods, which are currently 145%, could be “clearly” reduced.

It is important to note that Trump illustrated the imposition of high tariffs on most Chinese products and the resulting 125% tariffs on US exports to China as part of his economic pressure. These developments raise questions about the long-term effects of customs policy on the US economy.

long -term consequences of tariffs

According to a recently published study on the economic impact of the US China increase, the United States has increased tariffs to around 335 billion of Chinese goods, while China rejected tariffs worth around 120 billion USD. These tariff strategies have not only influenced the trade relationships between the two countries, but also significantly damaged the investment decisions in the US economy.

Investigations show that the customs increases can lead to an estimated long-term decline in US BIP by 1.3% and Chinese GDP by 0.7%. The US economy is particularly affected because almost 40% of its investment goods are imported from China. This leads to an increase in relative costs for investments in the United States, while China is less dependent on capital -intensive goods from the USA.

The differences in the demand composition between the two countries have a significant impact on trading dynamics and indicate that the analysis of the customs increases should also take into account the investment decisions. Economists warn that an attempt to dismiss Powell could result in serious market disorders and possibly a recession, which would further tighten the already fragile economic conditions.

Overall, these developments illustrate the complex interactions between US trade policy, Federal Reserve and the financial markets reacting to it. The next steps in US trade policy and monetary policy will be crucial to determine how the American and the global economy will develop in the near future.