Politics

How Trump’s Shifting China Stance Boosted US Stock Futures: What Investors Need to Know

Trump’s softened tariff stance on China led to stock futures gains after Friday’s sell-off; China warned of countermeasures.

byEditorial Staff

October 12, 2025, 8:55 PM

Close-up portrait of President Donald Trump in a dark suit and bright yellow tie, looking determinedly off-camera with flags in the background

President Donald Trump is photographed in the Oval Office, standing before American and Presidential flags while taking questions from members of the press. By Brian Jason / Shutterstock.com.

Executive Summary

US stock futures increased following President Trump’s comments that hinted at a potential de-escalation of the threat to impose 100% tariffs on Chinese goods, reversing a significant sell-off from Friday.

Trump softened his stance on Sunday, describing China’s President Xi Jinping as “a great leader” and noting their “a great relationship,” a shift from his earlier threat of additional 100% tariffs and characterization of China as “very hostile.”

China warned it would impose countermeasures if Trump did not withdraw the proposed tariffs, creating significant market uncertainty as the November 1 deadline approaches and raising questions about whether the tariffs will be enforced given Trump’s history of backing down from such threats.

The Story So Far

The current market volatility is a direct consequence of ongoing US-China trade tensions, which are frequently exacerbated by President Trump’s use of tariff threats as a negotiating tactic, a strategy he has historically employed and sometimes reversed. These actions often provoke retaliatory measures from China, such as increased export restrictions on critical rare earth minerals, leading to a cycle of escalation and de-escalation that significantly impacts global markets.

Why This Matters

The market’s immediate rebound following President Trump’s softened rhetoric on Chinese tariffs underscores the significant volatility his trade policy statements can induce, while the ongoing uncertainty surrounding the November 1 deadline and China’s warning of countermeasures highlight the potential for continued instability in global markets and a deterioration of US-China diplomatic relations.

Who Thinks What?

US stock futures and investors initially reacted negatively to President Trump’s threat of 100% tariffs on Chinese goods, leading to a significant sell-off, but rebounded positively after Trump softened his stance.

President Donald Trump initially threatened to impose 100% tariffs on Chinese goods but later softened his rhetoric, describing President Xi as a “great leader” and stating “it will all be fine!”, creating uncertainty about the November 1 deadline.

China’s commerce ministry warned it would impose countermeasures against the United States if Trump did not withdraw his proposed tariffs, emphasizing that while they do not want a tariff war, they are not afraid of one.

US stock futures saw a notable increase on Sunday following comments from President Donald Trump that suggested a potential de-escalation of a recent threat to impose 100% tariffs on Chinese goods. The market rebound comes after a significant sell-off on Friday, which was triggered by Trump’s initial announcement of the heightened tariffs.

Market Reaction and Prior Decline

As of 6:32 p.m. ET on Sunday, Dow futures were up 0.8%, S&P 500 futures rose 1.04%, and Nasdaq futures climbed 1.34%. This positive movement contrasted sharply with Friday’s performance, when the S&P 500 and Nasdaq experienced their worst day since April, and the Dow recorded its largest single-day drop since May.

Friday’s market downturn was a direct response to Trump’s threat of an additional 100% tariff on Chinese imports, set to take effect on November 1. Such a measure would raise total duties on goods from China to 130%, nearing the 145% rate seen during the peak of previous tariff disputes.

Trump’s Shifting Rhetoric

On Sunday afternoon, Trump appeared to soften his stance on the tariff threat, posting on Truth Social that “it will all be fine!” He further elaborated to reporters on Air Force One, describing China’s President Xi Jinping as “a great leader” and noting their “a great relationship.”

These remarks marked a shift from his previous comments last week, when he characterized China as “becoming very hostile.” This earlier statement followed Beijing’s move on Thursday to increase export restrictions on critical rare earth minerals, essential for producing consumer electronic products.

China’s Response and Market Uncertainty

In response to the tariff threat, Beijing issued a warning on Sunday, stating it would impose countermeasures against the United States if Trump did not withdraw his proposed tariffs. China’s commerce ministry emphasized its consistent position, declaring, “We do not want a tariff war but we are not afraid of one.”

The possibility of another round of escalating tariffs introduces significant market uncertainty and could undermine months of diplomatic progress between Chinese and US officials. Historically, Trump has at times backed down from tariff threats, leading to speculation about whether the November 1 deadline will be enforced.

When questioned about the November 1 deadline, Trump told reporters, “Let’s see what happens.” Meanwhile, US Trade Representative Jamieson Greer stated on Fox News’ “The Sunday Briefing” that the US was “not notified” in advance of China’s increased export restrictions, a claim that contradicts a spokesperson for China’s commerce ministry, who said “relevant countries and regions” were informed.

Outlook

The volatility in US stock futures underscores the significant impact that trade rhetoric and policy decisions, particularly those from President Trump, have on global markets. As the November 1 tariff deadline approaches, the financial world remains attentive to further developments in US-China trade relations.