Trump changes his mind again, says April tariffs will be softer than full reciprocity

President Donald Trump now says the tariffs he promised will not be fully reciprocal. On Tuesday, during an interview with Newsmax, the president said he’s leaning toward a softer approach.

“I’ll probably be more lenient than reciprocal, because if I was reciprocal, that would be very tough for people,” he said. The statement came with less than a week left before the April 2 deadline, when new trade levies are scheduled to kick in.

He also mentioned that not everyone will get a pass. “I know there are some exceptions, and it’s an ongoing discussion, but not too many, not too many exceptions,” Trump added. This is the first sign that his administration might back away from a harsher tariff strategy.

The reaction from markets was immediate.

Investors respond as consumer outlook hits 12-year low

On the same day as the Newsmax interview, the Conference Board reported that expectations around business, income, and labor have dropped to levels not seen since 2013. Stocks have been tumbling for weeks.

The S&P 500 fell 3% this month and briefly dipped more than 10% below its February peak, slipping into correction territory. Trade fears are spooking both retail and institutional players.

Barclays’ head of U.S. equity strategy, Venu Krishna, has slashed his 2025 S&P 500 target. He cut it from 6,600 to 5,900, citing lower earnings forecasts triggered by the ongoing tariff drama. That’s a projected increase of just 0.3% from the start of the year.

“Our base case assumes that earnings take a hit as tariffs (higher China tariffs stick but do not escalate, reciprocal tariffs amount to 5% on RoW) contribute to material slowing in US activity that nonetheless stops short of outright recession,” Venu wrote. He put a 60% probability on this scenario playing out, tying it to the final size and strength of the tariffs.

Meanwhile, China’s ready to respond.

Beijing reiterates warning that it’s prepared for ‘any type’ of trade war

Three weeks ago, Chinese officials told Washington they are ready to retaliate. After Trump announced fresh tariffs on all Chinese imports, China hit back by slapping 10–15% levies on U.S. farm goods.

“If war is what the US wants, be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end,” said China’s embassy on X, reposting words from a government briefing.

The warning wasn’t just empty talk. It came during the National People’s Congress in Beijing. China’s leadership has been pushing the image of a calm and peaceful power, accusing the U.S. of staying caught in foreign conflicts in Ukraine and the Middle East.

Officials are now repeating that warning, preparing for reciprocal tariffs against America after they sued the U.S. government at the World Trade Organization. Beijing hopes to use Trump’s isolationist tactics to its advantage, especially with Canada and Mexico also facing U.S. tariffs. Jinping’s strategy now seems aimed at looking like the adult in the room while trying not to scare off other potential global partners.

China’s tone may be sharp, but they’ve been setting the stage for this for a while. Last October, President Xi Jinping told his military to “strengthen preparedness for war,” during a drill near Taiwan. While there’s a difference between being ready and actually going to war, the language is still aggressive.

At the same time, Beijing is calling out Washington over other issues. A spokesperson from China’s foreign ministry accused the U.S. of using the drug fentanyl as a pretext for more trade restrictions.

“The fentanyl issue is a flimsy excuse to raise US tariffs on Chinese imports,” he said. “Intimidation does not scare us. Bullying does not work on us. Pressuring, coercion or threats are not the right way of dealing with China.”

White House struggles to manage fraying global trade ties

Trump’s latest comments suggest he might be feeling the heat. But inside his administration, the mood is mixed. Officials are divided over how far to push on trade. Some of Trump’s cabinet members are reportedly citing China’s online statements as proof that Beijing remains the country’s number one economic threat.

The backstory between Trump and Chinese President Xi Jinping is full of ups and downs. Xi was invited to Trump’s first inauguration, and Trump said the two had “a great phone call” just days before taking office. There were talks of another call last month, but it never happened. The silence hasn’t gone unnoticed.

Xi is already dealing with big problems at home. China’s economy is struggling with low consumption, real estate troubles, and high unemployment.

During the National People’s Congress, the Chinese government revealed it would inject billions into its economy, though most of those decisions had already been locked in behind closed doors.

China’s military spending sits at $245 billion, the second largest in the world, but still behind the U.S. The country spends 1.6% of its GDP on defense, which is less than both the U.S. and Russia, according to numbers from the Stockholm International Peace Research Institute.

Despite the standoff with Washington, China has also been trying to stabilize regional relations. Last Saturday, Chinese and Japanese officials held their first high-level economic talks in six years. That happened in Tokyo.

Japan’s Foreign Minister Takeshi Iwaya described it as “a very lively discussion.” He met with China’s Wang Yi and later told reporters the meeting went longer than expected but was “fruitful.”

When asked if Trump’s tariffs came up, Takeshi said it wasn’t the main focus of the conversation. “We agreed with South Korea to continue working together closely and also communicate clearly with the US,” he said, referencing another round of ministerial talks held the same day. He didn’t share details about what he and Wang discussed about U.S. trade moves.

Still, markets are on edge. Beijing is angry. And Wall Street has no clue what to expect next.

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