Trump is pressing ahead with a 10 per cent tax on US companies importing things from China, for example. And China retaliated on Tuesday by announcing its own tariffs on some US imports and an antitrust investigation into Google.
But the 15 per cent tariff on US coal and liquefied natural gas products, as well as a 10 per cent tariff on crude oil, agricultural machinery and large-engine cars imported from the US won’t take effect until Monday. That leaves time for more negotiation between Trump and Chinese President Xi Jinping.
Some on Wall Street also see tariffs on China as separate from Trump’s moves against other trading partners. Trump may be more likely to keep tariffs on China for the longer term, as he did in his first term, because of a desire to separate the United States more from its geopolitical rival.
Outside of China, the result of all this tumult for Canada, Mexico, the European Union and other US allies is more likely to be concessions and not tariffs, according to Thierry Wizman a strategist at Macquarie.
The stock price of Google’s parent company, Alphabet, rose 2.1 per cent.
Elsewhere on Wall Street, stocks that had swung sharply a day before when worries were high about tariffs on Mexico and Canada were calmer.
Auto makers had dropped because so much of their production occurs in Mexico, for example. But General Motors rose 0.7 per cent, and Ford Motor climbed 2 per cent.
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More attention was on earnings reports for US companies, which would likely be in the market’s spotlight if not for worries about a potential trade war.
Palantir Technologies jumped 26.4 per cent and was one of the strongest forces lifting the S&P 500 after reporting a stronger profit for the latest quarter than analysts expected. The Denver company also issued forecasts for upcoming revenue that were ahead of analysts’ projections, as CEO Alexander Karp said his company is at the “centre of the AI revolution.”
Pharmaceutical giant Merck tumbled 10.5 per cent despite beating sales and profit forecasts for the latest quarter. It gave a forecast for upcoming revenue that fell short of analysts’ expectations, due partly to a pause in shipments of one of its top-selling products to China.
In the bond market, Treasury yields edged lower after a report indicated the US job market may be adding less upward pressure on inflation. US employers advertised fewer job openings than economists expected at the end of December, indicating a slowing but still healthy job market.
The yield on the 10-year Treasury edged down to 4.54 per cent from 4.56 per cent late Monday. The two-year yield, which moves more closely with expectations for what the Federal Reserve will do with short-term interest rates, eased to 4.22 per cent from 4.25 per cent
In stock markets abroad, London’s FTSE 100 slipped 0.3 per cent, but other big European markets rose modestly.
In Asia, Hong Kong’s Hang Seng jumped 2.8 per cent, and South Korea’s Kospi rose 1.1 per cent.
