Trump lets up on Powell, China

Confronted with fresh warnings from financial markets, business leaders and top advisers, President Donald Trump this week eased off on two of his frequent punching bags: Jerome Powell and China.

- CATHERINE LUCEY HADRIANA LOWENKRON JAEWON KANG

Trump entered office with a steadfast desire to reshape the global economy. But his resolve has appeared to waver in the face of turmoil in equities and bonds and pleas from powerful executives who fear his sweeping tariffs and interference with the Federal Reserve could set off an economic calamity.

Trump on Tuesday said he had no intention to fire Powell — despite days of criticism over the central bank's policies — and said he believed a deal with Beijing would significantly reduce the sweeping tariffs he's posted on Chinese goods. After a report that the US would be willing to phase in lighter tariffs on Beijing over five years on Wednesday, Trump told reporters that China was “going to do fine” once talks had settled.

Trump's turnabout eased investors’ concerns that had fuelled a weeks-long selloff. The S&P 500 rose 1.7%, though it pared an earlier surge that had swelled to as much 3.4%.

Still, the whiplash underscores that markets and the economy are beholden to the whims of the US president unlike ever before — a sign that more turmoil lies ahead.

Trump made his about-face on Tuesday, saying he'd be willing to “substantially” pare back his 145% tariffs on China. He turned down his aggressive rhetoric a day after meeting with executives from Walmart Inc, Home Depot Inc and Target Corp, who said import taxes could disrupt supply chains and raise the prices of goods, according to people familiar with the matter. Warnings about the potential for empty store shelves within weeks seemed to resonate with Trump, one of the people said.

“We're going to have a fair deal with China,” Trump told reporters on Wednesday.

Later, Trump mused that he could announce tariff rates for countries, including China, “over the next two to three weeks.” At the same time, Trump said the deadline would ultimately depend on whether China engaged.