Markets are cheering a possible thaw in the U.S.-China trade war as Beijing signals it is open to talks with the American side.
The Chinese Commerce Ministry said it was evaluating signals from U.S. officials that it would be willing to strike a deal. However, Chinese officials said Friday the U.S. “must demonstrate sincerity” and be willing to drop the high tariffs it imposed on Chinese imports in early April.
Treasury Secretary Scott Bessent says the tariff impasse between the world’s largest economies is not sustainable, and Mr. Trump said he is open to a fair deal with Beijing. China’s export-heavy economy is suffering, with factories in April experiencing their largest slowdown in more than a year.
U.S. retailers are also in a pinch, meaning May could be a make-or-break month for U.S.-China trade relations and Mr. Trump’s broader economic agenda.
“Many [businesses] front-loaded cargo in advance of the tariffs taking effect, but they have not been able to bring in everything all at once,” said Jonathan Gold, vice president of supply chains and customs policy at the National Retail Federation. “Retailers also slowed or paused holiday orders, especially from China because they cannot afford to pay the massive 145% tariff. This is especially true for Main Street retailers concerned about their future.”
“We continue to call on the administration to quickly negotiate trade deals and lift the harmful tariffs from American businesses and consumers,” he said.
Wall Street investors cheered the possibility of a thaw between the U.S. and China, with stocks trading higher Friday. The three major U.S. indexes rose about 1.5%.
They were also buoyed by a stronger-than-expected employment report that said U.S. employers added 177,000 jobs in April and the unemployment rate was unchanged at 4.2%.
The employment increase was slightly below the revised total of 185,000 in March but beat forecasts of closer to 130,000.
Economists had braced for a low number due to uncertainty around Mr. Trump’s tariff plan, and declining consumer sentiment and gross domestic product to start the year.
However, the Bureau of Labor Statistics reported employment increases in health care, transportation and warehousing, financial activities and social assistance.
Federal government employment declined by 9,000 jobs in April as Elon Musk and his Department of Government Efficiency slashed spending and payroll.
The DOGE effort had been a major feature of Mr. Trump’s first 100 days, alongside his aggressive trade tactics. He shook the markets by imposing a 10% tariff on imports and threatening heftier levies on countries that sell plenty of products to Americans but don’t buy nearly as much from U.S. producers.
A trade war with China resulted in 100%-tariffs imposed by both sides.
Mr. Trump interpreted the labor report as proof that Americans must adapt to his aggressive policies for a period before seeing big gains.
“Energy down, mortgage rates down, employment strong, and much more good news, as Billions of Dollars pour in from Tariffs,” he wrote on Truth Social. “Just like I said, and we’re only in a TRANSITION STAGE, just getting started!!! Consumers have been waiting for years to see pricing come down. NO INFLATION, THE FED SHOULD LOWER ITS RATE!!!”
Democrats said the overall picture is tilting to the negative side. They said Mr. Trump inherited a growing economy and threw many indicators in reverse.
“Prices remain high, the economy is shrinking, and families are watching their savings vanish,” said Rep. Brendan Boyle, Pennsylvania Democrat and ranking member of the House Budget Committee. “This isn’t bad luck. It’s the direct result of one man’s reckless decisions — and if he doesn’t change course, it will cost Americans their jobs. Instead of addressing the crisis he’s created.”
Mark Zandi, the chief economist at Moody’s Analytics, said the April jobs report shows the economy is not in a recession despite the first-quarter decline in GDP.
“Employment increased 177k in the month, suggesting the job market remains a firewall between continued growth and a downturn,” he wrote on X.
But he said downward revisions from past months suggest employment only rose 119,000. “The firewall feels fragile. Unless the trade war de-escalates in the next few weeks, the firewall will come down, and a recession will ensue,” Mr. Zandi said.
