Trump, or lower tariffs! US stocks rebound, Chinese stocks soar

Reversal! Trump Changes His Mind Again?

Trump Considers Lowering Tariffs on Both Countries

U.S. Commerce Secretary Wilbur Ross revealed that Trump may cut tariffs on Canada and Mexico tomorrow, as the president considers providing a buffer for goods that comply with the U.S.-Mexico-Canada Agreement.

"Mexico and Canada have been calling me all day today, trying to show that they're going to do better, and the president is listening, because he's very, very fair and very reasonable," Ross said in an interview. "So I think he's going to work with them to find some way to do it — not a pause, not going to do a pause thing, but I think he's going to find a way: You do more, I'll meet you in the middle, and we might announce it tomorrow."

Ross didn't explain what the president is considering, as the U.S. imposed a 25% tariff on all goods from Canada and Mexico at 12:01 a.m. Tuesday.

Ross said the tariffs would likely fall "somewhere in the middle," and Trump would "move on some of the tariffs on Canada and Mexico, but not all the way down."

Canada and Mexico have both said they will retaliate against U.S. tariffs, and Trump said on Twitter on March 4 that Canada's retaliatory tariffs would immediately trigger "an increase of equal amount of tariffs" from the U.S.

Chinese Stocks Surge

U.S. stocks rebounded after falling as much as 2 percent, with the Nasdaq 100 closing up 1 percent and the S&P 500 up 0.01 percent and the Dow Jones Industrial Average down 0.48 percent.

However, the three major indexes still closed lower, with the Dow down 1.55 percent, the S&P 500 down 1.22 percent and the Nasdaq down 0.35 percent.

Moreover, Chinese stocks rallied in the U.S. market, with the Nasdaq China Dragon Index up 1.95 percent. Among individual stocks, Gds Holdings Ltd. rose more than 11 percent, Enpower Holdings Ltd. rose more than 8 percent, CenturyLink Inc. rose more than 7 percent, Jinko Solar Ltd. rose more than 7 percent, Kingsoft Corp. rose more than 7 percent and Bilibili Inc. rose more than 5 percent.

Traders Bet on Three Rate Cuts This Year

Concerns about the U.S. tariffs dragging down global economic growth have traders betting on three rate cuts this year from the Federal Reserve.

After the U.S. followed through on its threat to impose tariffs on Canadian and Mexican goods, markets fully priced in three 25-basis-point rate cuts this year from the Fed, the first since late December. The yield curve steepened, with the 2-year note yield falling 6 basis points to 3.89 percent.