Trump and China focus less on markets in trade talks
Add Axios as your preferred source to
see more of our stories on Google.

Illustration: Sarah Grillo/Axios. Photo: Joshua Roberts/Getty Images
Markets may not be the swing vote in U.S.-China trade talks this time.
Why it matters: That's bad news for "TACO" traders, investors betting that President Trump will blink on tariffs if markets tumble.
Driving the news: Both the market and trade officials seem to be letting each other cook.
- China trade experts say both Trump and Chinese officials are less focused on market reactions than they might have been in prior rounds of talks.
- The market, meanwhile, isn't showing up with a vote, with stocks largely recovering in the days after the initial jabs between Trump and Beijing.
What they're saying: "The CCP thinks of Trump as a deal maker, and they know that if they offer a few concessions, that Trump will latch onto them, and he will strike a deal," Shehzad Qazi, chief operating officer of China Beige Book, an economic data firm focusing on China, tells Axios. He also does not buy the idea that China sees a market downturn as a tool within trade talks.
Yes, but: This contrasts with reporting from the Wall Street Journal that indicates Chinese officials are confident that a market selloff would push Trump to deescalate the trade war (yes, China is in on the TACO trade).
- China is "incredibly confident, almost cocky and arrogant, about the fact that they can ultimately last longer, that they have more leverage, that they can make more demands of the U.S.…they don't think that a future administration will continue carrying on these policies," Qazi says.
Between the lines: Some investors say it's not just the trade war that could depend on a swing vote from the market.
- "We've got a lot of situations where action depends on the markets getting frustrated, whether that's the discussion with China…(or a) shutdown. To get past these issues, you need a pretty significant market move," Yung-Shin Kung, chief investment officer at Mast Investments, tells Axios.
- Kung believes investors are underpricing broader risks given the market's tepid reaction to these different headwinds.
Zoom out: The stock market's sway over the president may be overrated.
- Remember, it was the bond market getting "yippy" that pushed Trump to shift course after "Liberation Day" in April, not the stock market.
- Treasury Secretary Scott Bessent told CNBC yesterday the administration "won't negotiate because the stock market is going down."
What we're watching: Nov. 1 is the big looming deadline, when an additional 100% tariff may be imposed on imports from China.
- "You effectively cancel trade between the two countries if you're going to have an effective tariff rate into the triple digits, so I think a lot of it will hinge on that," says Kevin Gordon, senior investment strategist at Charles Schwab.
