Stocks Recovered from Trump’s China Tariff Deal Violation Low

·       Wall Street surged from Trump’s China deal violation warning panic low as the Trump admin and Trump himself downplayed it later

·       China may not be fully ready to give away its ‘Trump card’ of rare earth materials export restriction as long as Trump continues his tech & cold War and other bullying tactics

·       Wall Street was also bound by improving US consumer confidence after plunging bottom and upbeat personal income data along with cooling inflation (core PCE)

·       The US as-well-as global financial market is now almost fully controlled by Trump-his morning mood, Truths and random media comments rather than Fed’s

On Thursday, May 29, 2025, Wall Street Future waved and closed almost flat amid Trump’s tariffs block and unblock by lower and appellate courts. On late Thursday, May 29, 2025, the U.S. Court of Appeals for the Federal Circuit temporarily reinstated President Trump's "Liberation Day" tariffs, which had been previously annulled by the U.S. Court of International Trade (CIT). The appeals court's order grants an immediate administrative stay, temporarily halting the lower court's judgments and injunctions while the court reviews further motions. If the appeal had been dismissed, the Trump administration was prepared to escalate the matter to the Supreme Court. The Appellate court issued an administrative stay, stating it needs time to review filings, and the stay will remain in effect until further notice.

The Appellate Court order said: "The request for an immediate administrative stay is granted to the extent that the judgments and the permanent injunctions entered by the Court of International Trade in these cases temporarily stay until further notice while this court considers the motions papers”.

On May 29, Trump was largely silent; with no Truths or media bytes after CIT blocked partially his tariffs. But after the Appellate court granted a stay on the CIT order, Trump again came to his form, posting random comments in his Truth handle, which is nowadays the main source of volatility in the financial market. Trump’s morning moods, Truths and random media comments are now virtually controlling the market since Trump 2.0 from late January (like Trump 1.0); no one mow cares for Fed comments or even important US economic data.

On Friday, May 30, 2025, Trump Truthed on the Appellate Court Order Stay of CIT block of his tariffs:

“The U.S. Court of International Trade incredibly ruled against the United States of America on desperately needed Tariffs but, fortunately, the full 11 Judge Panel on the U.S. Court of Appeals for the Federal Circuit Court has just stayed the order by the Manhattan-based Court of International Trade. Where do these initial three Judges come from? How is it possible for them to have potentially done such damage to the United States of America? Is it purely a hatred of “TRUMP?” What other reason could it be?

I was new to Washington, and it was suggested that I use The Federalist Society as a recommending source for Judges. I did so, openly and freely, but then realized that they were under the thumb of a real “sleazebag” named Leonard Leo, a bad person who, in his way, probably hates America, and has his separate ambitions. He openly brags about how he controls Judges and even Justices of the United States Supreme Court — I hope that is not so, and don’t believe it is!

In any event, Leo left The Federalist Society to do his own “thing.” I am so disappointed in The Federalist Society because of the bad advice they gave me on numerous Judicial Nominations. This is something that cannot be forgotten! With all of that being said, I am very proud of many of our picks, but very disappointed in others. They always must do what’s right for the Country!

In this case, it is only because of my successful use of Tariffs that many Trillions of Dollars have already begun pouring into the U.S.A. from other Countries, money that, without these Tariffs, we would not be able to get. It is the difference between having a rich, prosperous, and successful United States of America, and quite the opposite. The ruling by the U.S. Court of International Trade is so wrong and so political! Hopefully, the Supreme Court will reverse this horrible, Country-threatening decision, QUICKLY and DECISIVELY.

Backroom “hustlers” must not be allowed to destroy our Nation! The horrific decision stated that I would have to get the approval of Congress for these Tariffs. In other words, hundreds of politicians would sit around D.C. for weeks, and even months, trying to conclude as to what to charge other Countries that are treating us unfairly.

If allowed to stand, this would destroy Presidential Power — The Presidency would never be the same! This decision is being hailed all over the World by every Country, other than the United States of America. Radical Left Judges, together with some very bad people, are destroying America. Under this decision, Trillions of Dollars would be lost by our Country, money that will, MAKE AMERICA GREAT AGAIN. It would be the harshest financial ruling ever leveled on us as a Sovereign Nation. The President of the United States must be allowed to protect America against those who are doing Economic and Financial harm. Thank you for your attention to this matter!”

Overall, Trump and his admin are frequently criticizing the US judicial system, accusing concerned ‘activist’ judges personally as ‘Radical Left minded Lumpen’ and anti-Trump agenda. Trump decried the CIT order to bloc most of his reciprocal tariffs decision as politically motivated, potentially costing the U.S. “trillions” and undermining presidential power. He boasted about the stay by the U.S. Court of Appeals for the Federal Circuit, which temporarily reinstated the tariffs, and urged the Supreme Court to reverse the CIT’s ruling eventually.

Trump questioned the origins of the three CIT judges, suggesting their ruling might stem from “hatred of TRUMP” or influence from “Radical Left” forces. He speculated their decision could reflect bias or external pressures, though the judges likely ruled based on constitutional limits, as the Constitution grants Congress trade authority. CIT judges, appointed for life by various presidents, typically trade law experts based in New York, with some possibly Trump appointees.

Trump also criticized The Federalist Society and its former leader, Leonard Leo, for “bad advice” on judicial nominations, alleging Leo’s ambitions compromised judicial selections. He claimed tariffs were vital for economic prosperity, driving “trillions” into the U.S., though economic data showed GDP growth, with tariffs risking inflation. The post reflects Trump’s view that the ruling threatens U.S. economic and presidential power, framing it as a global setback for America’s interests; although Trump’s chaotic and uncertain policies are risking a synchronized global stagflation or even an outright recession.

Fox Business Reporter on X

“The very few lawyers I know who are involved in the US Court of International Trade and the appeals process of its rulings tell me Trump would have been better off NOT appealing to the federal circuit in DC because it's packed with Obama-Biden appointed judges; they are inclined to rule against him in the legality of his using an emergency order to announce sweeping tariffs. They say he should appeal directly to SCOTUS (SC), which also not an easy lift given recent anti-Trump rulings but still better odds”.

Trump on China trade, tariff and tech stance

On early US Friday, May 30, after the Truth about CIT & Appellate court block & unblock of his tariffs, Trump then posted another Truth, threatening China to accelerate trade negotiations; otherwise, it may face ‘actions’ for his perceived noting that China violated earlier trade deal verbal agreements made at Geneva.

Trump wrote: “Two weeks ago China was in grave economic danger! The very high Tariffs I set made it virtually impossible for China to TRADE into the United States marketplace which is, by far, number one in the World. We went, in effect, COLD TURKEY with China, and it was devastating for them. Many factories closed and there was, to put it mildly, “civil unrest.” I saw what was happening and didn’t like it, for them, not for us. I made a FAST DEAL with China to save them from what I thought was going to be a very bad situation, and I didn’t want to see that happen. Because of this deal, everything quickly stabilized and China got back to business as usual. Everybody was happy! That is the good news!!! The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US; So much for being Mr. NICE GUY!”

Trump basically claimed that because of his 145% tariff embargo on China, the Chinese economy was on the verge of collapse and there were ‘mild signs of social unrest’. Thus as a ‘well-wisher’ of China, Trump arranged a quick deal in Geneva, but now China is not acting in the spirit of that Geneva deal. On early US Friday, Trump’s China ‘threatening’ Truth caused a brief disruption in Wall Street; stock futures, and USD slid, while Gold surged on the renewed concern of an all-out US-China trade war 2.0.

Trump Downplayed his anti-China rhetoric after a few hours.

But Wall Street had a sigh of relief after Trump almost scaled back his anti-China Truths after a few hours at the White House ‘retirement’ ceremony of Musk. Trump downplayed his earlier China comments about the violation of the Geneva Agreement and said it’s a minor issue and his negotiation team is taking care of it also if required, he will personally speak with Chinese President Xi in the coming days.

During a Q&A with Musk present, Trump referenced ongoing trade talks with China, stating he would speak to President Xi Jinping and was “hopeful we’ll work that out,” suggesting a willingness to de-escalate tensions. This aligned with reports of U.S.-China talks in Geneva aimed at defusing trade disputes, as noted by Commerce Secretary Howard Lutnick. When asked about Chinese students concerned about his administration’s aggressive visa revocation plans, Trump responded reassuringly, saying, “They’re going to be okay. It’s going to work out fine. We just want to check out the individual students.”

Background of Trump’s China comments

The WSJ reported that the trade truce hinged on Chinese Vice Premier He Lifeng’s commitment to resume rare-earth exports—critical for U.S. industries like defense, tech, and automotive—in exchange for a 90-day tariff pause, but China’s delays in licensing approvals fueled U.S. doubts about compliance. Trump is desperate to stabilize Chinese supply chains for rare-earth minerals like samarium and dysprosium, vital for F-35 jets to Tesla vehicles and iPhones. Trump’s continuous shifting in trade stance reflects diplomatic efforts to salvage the China truce amid concerns over economic fallout and market volatility.

The Geneva Agreement of trade truce between the US and China in mid-May depended on China's concession regarding rare earth materials. Chinese Vice Premier He Lifeng reportedly agreed to resume rare-earth exports in exchange for Washington agreeing to a 90-day tariff truce.

On early Friday, May 30, the United States Treasury Secretary Bessent said in a Fox News interview that talks with China have ‘stalled a bit,’ but expressed confidence in the Chinese side coming to the negotiating table when US President Donald Trump ‘makes his preferences known.’

Bessent said that he believes there will be further talks with China in the "next few weeks" and that, "at some point," Trump and Chinese President Xi Jinping will hold a call. Due to "the magnitude" and complexity of the trade negotiations, both Trump and Xi will need to "weigh in," he added, pointing to what he described as a "very good relationship" between the two leaders. As per the WSJ report, the US had asked China to resume rare-earth exports; Beijing has slow-walked rare-earth export approvals. China is also concerned over Trump’s tech war, revoking Chinese student visa as a bullying tactic not agreed in the Geneva meeting. China calls out Trump for 'abuse' of semiconductor export controls.

The Treasury Secretary Bessent also said in a Fox News interview:

·       A couple of very large trade deals are close to being finalized

·       Our trading partners are coming to us in good faith, trying to complete the deals before the 90-day pause ends

·       The US hasn't seen any change in their (other countries) attitude after the recent tariff court rulings

·       President Trump has the right to set the US trade agenda

·       It’s highly inappropriate for the US judiciary to intervene in President Trump's trade agenda

·       Anything the courts do to get in the way harms the American people in terms of trade and terms of tariff revenue

·       Even the US Senate is choosing not to override the President

·       U.S.-China Trade Talks "Stalled," Might Require Trump-Xi Call

Overall, Bessent described U.S.-China trade talks as “a bit stalled” but noted progress on a couple of “very large” trade deals with other nations, with more talks expected soon.

US Trade Representative Greer:

·       Efforts for a Trump-Xi call ongoing

·       China is slow on removing some tariffs countermeasures

·       We have a standing call with the Indian trade minister every day

·       We haven't seen the expected flow of China's critical minerals

·       We have meetings next week at the OECD with the Malaysians, the Vietnamese, and the EU

·       We can expand Section 301 tariff actions as needed

·       China is the biggest trade deficit problem, the EU's next

·       I am to meet my EU counterpart early next week

·       We are not seeing major changes in China's behavior on trade

·       The US should have control over its critical sectors

·       China's behaviour is completely unacceptable

·       We have other tools if the tariff ruling "goes the other way" as well

·       Tariffs litigation not hurting trade negotiations

·       I had emails and texts from foreign officials saying, "We're just going to keep negotiating with you as before"

·       We've been focused on monitoring Chinese compliance, or in this case non-compliance with the agreement

Trump’s Truth on CBO budget projections:

“The Democrat-inspired and “controlled” Congressional Budget Office (CBO) purposefully gave us an EXTREMELY LOW level of Growth, 1.8% over 10 years. How ridiculous and unpatriotic is that? They did the same thing to us in 2017, and we DOUBLED their numbers. The information they recently released is even more absurd and indefensible. I predict we will do 3, 4, or even 5 times the amount they purposefully “allotted” to us (1.8%) and, with just our minimum expected 3% Growth, we will more than offset our Tax Cuts (which will, in actuality, cost us no money!).”

Trump narrated CBO’s budget projections of 1.8% GDP growth over 10 years as absurd and unpatriotic. Trump projected almost 5-10/15% real GDP growth over the same period, which will boost revenue growth offsetting tax cuts.

Highlights of Trump’s comments:

·       Tariffs are so important. We're happy with the court decision yesterday

·       We're talking about changing various systems

·       We're committed to making DOGE cuts permanent. Most DOGE changes will be codified by Congress

·       Musk will be back and forth

·       We'll continue cuts surgically

·       Tariffs are important. I am happy with an appeals court decision

·       China violated the deal

·       I Will speak to China’s President Xi. Hopefully, we'll work it out

·       Chance for a deal with Iran

·       Iran deal is possible in the not-too-distant future

·       Iran can't have a nuclear weapon

·       I have great support for the tariffs

·       We want to win the court battle on tariffs

·       Trump on tax bill in Senate: I want a bigger cut in taxes

·       The tax bill will be negotiated with the Senate and the House

·       Trump on tax bill in Senate: We're seeking slightly lower tax number

·       Trump on tax bill: Will be adjusted over the coming weeks

·       We should get rid of the US debt limit or extend it

·       Putin and Zelenskyy are both stubborn

·       Other nations will destroy us with unchecked tariffs

·       Trump on tariff company impacts: Musk will build the whole car here. All manufacturers will build their parts in the US

·       Trump on Musk: You build a car, make it in America

·       Powell meeting was good

Elon Musk on his departure from DOGE/Trump admin:

·       This is not the end of DOGE, but the beginning...The DOGE team will only grow stronger over time...It is permeating throughout the government, and I am confident that, over time, we will see—a trillion dollars of waste and fraud reduction

WH Deputy Chief of Staff Miller

·       The US has a wide range of options for China

·       The US has many options to hold China accountable

·       We won't allow China to take manufacturing capacity from the US

·       China should seek the path of cooperation

·       Both China and the US have maintained communication over concerns

·       China didn't fulfill obligations made to the US

·       US Trade Representative Greer and Lutnick will provide details on China

·       Trump hopes that China will choose the path of cooperation and common ground

·       China must show its commitment to rules-based international order

White House (WH) Senior Adviser Hassett:

·       Tax bill deficit calculation depends on growth

·       China discussions are ongoing

·       We hope to make progress with China in the next week

·       I'm optimistic we'll have a deal with China

China's US Embassy spokesperson:

·       Both China and the US have maintained communication over their respective concerns in the economic and trade fields on various bilateral and multilateral occasions at multiple levels

·       China has repeatedly raised concerns regarding the US abuse of export control measures in the semiconductor sector and other related practices.

·       China urges the US to cease discriminatory restrictions and jointly uphold the consensus reached at the high-level discussions in Geneva.

The US-China trade deal negotiations may have already stalled over Trump’s usage of tech and China’s usage of rare earth materials as a nuke against each other. The U.S.-China trade negotiations have resulted in a temporary agreement to de-escalate the ongoing trade war. Following high-level talks in Geneva, Switzerland, both nations agreed to a 90-day pause on most tariffs imposed since April 2025. The U.S. reduced its tariffs on Chinese imports from 145% to 30%, retaining a 10% baseline tariff and a 20% tariff related to fentanyl precursor chemicals.

China, in turn, also lowered its tariffs on U.S. goods from 125% to 10% and agreed to suspend or remove non-tariff countermeasures, such as export restrictions on rare earth elements. Both sides established a consultation mechanism led by Chinese Vice Premier He Lifeng and U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer to continue discussions, with potential meetings in China, the U.S., or a third country.

The US-China Geneva trade deal negotiation agreement, announced on May 12, 2025, has been described as a significant step to avoid further economic disruption. However, this is a temporary truce, not a comprehensive deal, and underlying issues—such as the U.S. trade deficit with China ($295.4 billion in 2024) and tensions over fentanyl, technology, and market access—remain unresolved. Some tariffs from Trump’s first term and a 20% fentanyl-related duty from February 2025 persist, and negotiations could falter, as seen in past breakdowns like the 2020 Phase One Trade Agreement. There are also concerns about U.S. trade credibility and China’s strategic use of administrative measures in future talks.

Overall, China is not willing to give one of its high-leverage Trump cards of rare earth materials easily to the US, which Trump is now desperately seeking to keep the US tech engine online. China will not negotiate trade deals with the Trump admin under any pressure and will not bow down to Trump/US bullying tactics. Unlike other major global leaders (US trading partners), protocol-savvy China or its President Xi will not call or even talk with Trump at gunpoint. China wants mutual respect and meaningful trade negotiation dialogues with the Trump admin rather than a daily dose of tariffs on & off. Trump’s tariff rhetoric may bring other nations including the EU to accelerate the trade negotiations process, but it will not work with China.

Status of US-Japan trade deal negotiations

The U.S.-Japan trade deal negotiations remain ongoing but have not yet resulted in a comprehensive agreement. The negotiations, which began in April 2025 following President Trump's announcement of "Liberation Day" tariffs, are focused on reducing tariffs and addressing non-tariff barriers, particularly in light of a 24% tariff on Japanese exports (including a 25% duty on automobiles) set to take effect in July 2025 unless a deal is reached. A 10% universal tariff on Japanese goods remains in place during the 90-day pause announced on April 9, 2025. Japan is seeking zero-for-zero (Free Trade Agreement-FTA) or lower than 10% universal tariffs for all including automobiles and steel, but Trump admin is not ready to provide that.

Japan’s chief trade negotiator, Ryosei Akazawa, has been actively engaged, with multiple rounds of talks held in Washington, including a fourth-round scheduled for late May 2025. Japan is pushing for the elimination of U.S. tariffs, especially the 25% auto tariff, which is critical given that automobiles account for roughly a third of Japan’s exports to the U.S. Japanese negotiators have expressed frustration over the U.S. changing its demands, contributing to delays. Japan has also proposed concessions, such as easing tough safety regulations for US automobiles, increased imports of U.S. agricultural products like corn and soy, and cooperation in shipbuilding, but remains firm on excluding currency and defense issues from trade talks.

The U.S., led by Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer, aims to address the trade deficit ($58.3 billion in 2024) and secure market access for American goods. However, domestic political pressures in Japan, including upcoming upper house elections in July 2025, limit Tokyo’s flexibility, particularly on sensitive issues like rice imports. The U.S. may also blamed for a lack of clarity in its objectives, as the Trump administration’s approach may prolong uncertainty.

On May 30, 2025, Japan's Government said:

·       Economy Minister Akazawa met with US Treasury Secretary Bessent and Commerce Secretary Lutnick for 130 minutes

·       Japan's Economy Minister Akazawa strongly requested that the US rethink its tariff measures

·       We confirmed progress with the US in trade discussions

·       We agreed to accelerate trade discussions and hold talks again before the G7 summit

·       The US and Japan have deepened their understanding of each other's positions and made progress towards a trade deal

·       Japan's economic minister Akazawa met with US Treasury Secretary Bessent and Lutnick

Japan's Economy Minister Akazawa:

·       I spoke with Bessent and Lutnick about trade. I asked for a review of the tariffs strongly

·       We agreed to speed up bilateral coordination toward the G7

·       Nothing is decided until everything is decided in a deal

·       Japan's position remains unchanged over tariffs

·       We aim to complement US and Japan's strengths in chips

·       We can't reach a deal without a review of the tariffs

·       We're watching the official US announcement on US and Nippon Steel

·       No change in stance that tariffs, including those on auto, regrettable

Conclusions

Trump trade & war uncertainty is far from over. Despite the lower court blocking Trump's tariffs, the Trump admin has ensured an easy stay from the US Appellate Court and continued his tariff & trade deal agenda to get a favorable trade deal for US exports and reshoring US manufacturing as much as possible and feasible. Trump may soon withdraw his 20% Fentanyl levy on China and the US will continue with 10% universal tariffs on all and sectoral higher tariffs of 50% on metals, 25% on automobiles, and pharmaceuticals along with selected exemptions. But even at around 15%-20% weighted average tariffs, it’s still substantially higher than 2.5% prior, which will inevitably cause a higher cost of living for Americans, subdued discretionary consumer spending, tepid private capex, higher unemployment, and lower economic growth. In other words, the US economy may be heading for a stagflation-like scenario in the coming days unless there is a corresponding increase in real income along with productivity.

Trump, the tariff Man and Deal Maker is set to extend his tariff pause from July-August to at least December’25 or even permanently depending upon ongoing trade deal negotiations status. Trump is bound to scale back his higher reciprocal tariffs leaving only 10% universal basic tariffs along with selected sectoral tariffs like on metals, automobiles, semiconductors (chips), and pharmaceuticals for the sake of so-called national security to ensure US manufacturing.

If Trump goes on with his higher reciprocal tariffs, it would cause supply shock and a higher cost of living for ordinary Americans, most of which live on a pay check to pay check basis. Further, such tariffs would cause a demand shock in the future and an all-out recession. This will also cause a loss of Vote Bank (ordinary Americans) and Note Bank (political funding by corporate America) for Trump and Republicans. Thus court or no court, Trump is bound to blink and current legal issues may be a wonderful opportunity for Trump for a face-saving exit after December’2025, well before the November’26 US mid-term election to save his Trifecta (White House, House, and Senate majority); but it may be a distinct possibility.

Bottom line

Trump may extend his reciprocal tariffs pause from July-August to December’25 to ensure no supply shock for the US economy. Trump may also get good trade deals for US export, and reshoring of US manufacturing, using the threat of higher tariffs.

Market wrap:

On Friday, May 30, 2025, Wall Street Futures recovered from Trump’s China deal agreement violation Truth as Trump admin officials and also Trump himself downplayed any serious issues. Trump said he expected talks with his Chinese counterpart Xi Jinping, following accusations that China breached a trade deal about rare earth materials export restrictions. The S&P 500 erased most of a 1.2% drop, the Nasdaq 100 down 0.3%, while the Dow added 100 points. In line with expectations, US core PCE inflation and upbeat personal income also boosted Wall Street coupled with a positive revision of US/UM consumer sentiment.

The S&P 500 records the strongest May performance since 1990; the Nasdaq registers the biggest May percentage gain since 1997. The S&P 500 and Nasdaq, register the biggest monthly percentage gain since November 2023. The S&P 500 closed May with a gain of 6.2%, while the Nasdaq booked a 9.6% surge—both booked their best month since November 2023. The Dow rose 3.9% this month.

On Friday, Wall Street was boosted by consumer staples, utilities, communication services, healthcare, financials, real estate, materials, and industrials, while dragged by energy, consumer discretionary and techs amid the growing US-China tech war. Energy slips as Oil skids on a report that OPEC+ may opt for a production hike decision officially in the forthcoming OPEC meeting. Dow Jones (DJ-30) was boosted by Walmart, Amgen, Verizon, United Health, J&J, and Walt Disney, while dragged by NVIDIA, Nike, Caterpillar, Chevron, and 3M. Gold surged on escalated trade & tariff war tensions after Trump’s deal violated the Truth. Tesla zoomed on Musk’s departure from the Trump admin and committed to refocusing on business rather than politics. Trump may have also softened his Chain stance for Musk’s and corporate America’s influence amid a vital business relationship with China.

Weekly-Technical trading levels: DJ-30, NQ-100, and Gold

Looking ahead, whatever the fundamental narrative, technically Dow Future (CMP: 41400) now has to sustain over 41800 for a further rally towards 42000/42500-43000/43300* and 43500*, and even 44600-45200 in the coming days; otherwise sustaining below 41700, DJ-30 may again fall to 41000/40600-4010039900 and 39700/38600-38000/37700-37300/37000 in the coming days.

Similarly, NQ-100 Future (20200) has to sustain over 20800 for a further rally to 21100/21400-21700*/22000* and 22400-22600 in the coming days; otherwise, sustaining below 20750/20600-20500/20400, NQ-100 may again fall to 20000/19600-19400/19200 and 19100/18800-18600/18000-17600/16400 and 16200-15800 in the coming days.

Also, technically Gold (CMP: 3240) has to sustain over 3275-3300 for any recovery to 3325/3375* and 3400/3425-3450/3505*, and even 3525/3555 in the coming days; otherwise sustaining below 3290-3275, Gold may again fall to 3255/3225-3200/3165* and further to 3130/3115*-3075/3015-2990/2975-2960*/2900* and 2800/2750 in the coming days.