Stock Market Rally Stalls as Trump Escalates Tariffs on China

Wall Street’s early-week optimism quickly faded Tuesday as President Donald Trump intensified his economic battle with China, announcing a major tariff escalation after Beijing threatened retaliatory measures. The initial stock surge turned into a market whimper by day’s end, a clear sign that the global economic status quo is being shaken to its core.

After strong rebounds Monday and early Tuesday, the major indexes slipped:

• The Dow Jones Industrial Average, which had jumped over 1,300 points in the morning, ended the day up just 0.2%.

• The S&P 500 closed up 0.2%, giving up most of its gains.

• The Nasdaq Composite edged higher by only 0.4%, after rallying hard early.

The reason? Trump’s administration slapped an additional 50% hike on Chinese imports, following up on last week’s “Liberation Day” tariffs that had already sent markets and global leaders scrambling.

“Countries like China, who have chosen to retaliate and try to double down on their mistreatment of American workers, are making a mistake,” said White House Press Secretary Karoline Leavitt. “President Trump has a spine of steel, and he will not break.”

The move comes as Beijing announced its own tariff threats, confirming that this is no longer just a trade spat it’s a full-blown economic showdown. But unlike the weak-kneed appeasement strategies of the previous administration, Trump is meeting aggression with unflinching strength.

Earlier in the day, markets surged on optimism that multiple nations were racing to negotiate new trade deals to avoid the tariffs. Japan and Israel, among others, have already opened formal talks with the U.S., signaling that Trump’s hardball tactics are delivering results.

“Countries from all over the World are talking to us. Tough but fair parameters are being set,” Trump wrote on Truth Social. “Spoke to the Japanese Prime Minister this morning. He is sending a top team to negotiate!”

The ripple effects were immediate. Japan’s Nikkei index jumped 6%, and momentum carried into U.S. markets until China decided to raise the stakes. Still, negotiations are in motion. U.S. Treasury Secretary Scott Bessent is leading discussions with Japan, and Trump has reopened the door for Nippon Steel’s potential acquisition of U.S. Steel, a deal previously blocked by Joe Biden in January.

Trump’s executive order now tasks CFIUS with determining whether the $15 billion steel deal poses any national security risks a clear indication that every decision is being weighed with America’s interests front and center.

Where Joe Biden’s approach was to bow to international pressure and protect globalist interests, Trump is rewriting the rules of global trade putting American industry, American workers, and American security first.

The markets may be jittery in the short term, but make no mistake: the era of unchecked foreign exploitation is over. Trump’s message to China and to the world is loud and clear: fair trade or no trade.

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