U.S. stocks surged Monday after President Trump tried to cool trade tensions with Chinese President Xi Jinping over the weekend and Treasury Secretary Scott Bessent said the leaders might still meet.
Wall Street ended last week with a massive selloff, as Mr. Trump threatened to impose a 100% tariff on Chinese imports as retaliation for Beijing’s decision to withhold rare earths and other products.
Mr. Trump said Sunday that the situation would work out, causing the Dow Jones Industrial Average to jump 300 points to start the week.
“Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I,” Mr. Trump posted on Truth Social. “The U.S.A. wants to help China, not hurt it.”
Treasury Secretary Scott Bessent on Monday said China miscalculated, but there is room for negotiation.
“We are communicating now. I am confident that we can move forward,” Mr. Bessent said on Fox Business’ “Mornings with Maria.”
The path forward remains uncertain. Tech companies and military manufacturers rely on samarium and other rare earths, yet China decided last week to withhold many of those minerals, especially for military purposes in other countries.
Mr. Trump reacted angrily and threatened to impose the new levies on Nov. 1. If he follows through, it would bring the effective rate on some Chinese products to 130%.
China’s Foreign Ministry on Monday said threatening new tariffs was “not the right way to engage with China.”
Ministry spokesman Lin Jian said the countries must “solve each other’s concerns through dialogue” and “properly handle differences on the basis of equality, respect and mutual benefit.”
Mr. Trump seemed caught off guard by China’s decision to crack down on critical imports. But he also said the U.S. would be willing to retaliate by withholding exports of “critical software” to China.
“It’s going to be a delicate dance, and a lot of it is going to depend on how the Chinese respond,” Vice President J.D. Vance said on Fox News’ “Sunday Morning Futures.” “If they respond in a highly aggressive manner, I guarantee you, the president of the United States has far more cards than the People’s Republic of China. If, however, they’re willing to be reasonable.”
During a trade spat earlier this year, U.S. officials insisted they had the upper hand because China relies on the American market to buy its products.
Mr. Bessent said the Chinese economy is already “doing poorly.”
Still, parts of the U.S. have suffered blowback from the tensions. China stopped buying soybeans from American growers, delivering a massive financial hit to the heartland.
Mr. Trump said he would bring up the issue with Chinese President Xi Jinping at a summit in South Korea later this month. Now, it is unclear whether the leaders will meet.
The Treasury secretary said both leaders have time to “talk things out” before Mr. Trump’s Nov. 1 deadline for higher tariffs.
“They have a very good relationship,” Mr. Bessent said.
