Stocks ticked up Wednesday as President Trump and senior officials in Washington ignited optimism that the trade war with China could wind down soon, although there's no evidence that a deal is imminent.
Treasury Secretary Scott Bessent has been at the tip of the spear in efforts to mollify Wall Street, telling a group of investors Tuesday that he expects a "deescalation" with China.
"No one thinks the current status quo is sustainable," he said.
In a Wednesday speech, Bessent talked up the possibility of an agreement.
"There is an opportunity for a big deal here," he said.
Those remarks followed Trump's talk about reducing tariffs on China, saying levies will "come down substantially" from their current level of 145 percent.
"We're going to be very nice," Trump said Tuesday night. "My relationship with President Xi [Jinping] is great … I think we'll make a deal."
However, White House press secretary Karoline Leavitt said there would be no tariff reductions for China before a deal is struck.
"Let me be clear, there will be no unilateral reduction in tariffs against China," Leavitt said on Fox News.
China's foreign ministry spokesman called for "dialogue based on equality, respect and mutual respect."
The Trump administration has not announced any new trade deals yet, but says "terms of reference" are in place with several countries to act as a framework for potential future deals.
The softer tariff talk comes as Trump backs away from his scathing remarks about Federal Reserve Chair Jerome Powell, which had spooked investors.
Trump said Tuesday he has "no intention" of firing Powell.
"Never did," Trump said. "The press runs away with things. I have no intention of firing him."
Kevin Hassett, the director of the National Economic Council, said last week the White House was exploring ways to fire Powell.
MEANWHILE…
Elon Musk plans to draw back his participation in the Department of Government Efficiency (DOGE) next month to focus on running Tesla, which reported an earnings plunge of 71 percent in the first quarter.
"Starting probably next month, May, my time allocation to DOGE will drop significantly," Musk said. "I'll have to continue doing it for, I think, the remainder of the president's term just to make sure that the waste and fraud doesn't come roaring back, which we'll do, if it has the chance."
The tech billionaire said he still planned to devote one or two days a week to "government matters" for "as long as the president would like me to do so and as long as it is useful."
Musk's involvement in politics led to deep polarization around Tesla, which has been the subject of protests and instances of vandalism. The company said Tuesday it had been harmed by the "changing political sentiment." Some Democrats have proudly returned their Tesla vehicles to express their disgust with Musk's participation in the Trump administration.
However, Tesla also acknowledged the company has been hit by the global trade war and tariffs.
On the earnings call, Musk said he would "advocate for lower tariffs."
"Uncertainty in the automotive and energy markets continues to increase as rapidly evolving trade policy adversely impacts the global supply chain and cost structure of Tesla and peers," Tesla wrote in its Q1 report.
Musk also said China's move to block the exports of rare earth magnets in response to Trump's tariffs would slow the rate of production for the company's humanoid robots.
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