Wall Street on guard against Trump’s so-called deal

In recent days, the U.S.-China tariff agreement, heavily promoted by the U.S. administration and Donald Trump himself, has elicited mixed and often lukewarm reactions in global financial markets. Although Trump described his meeting with Chinese President Xi Jinping as “12 out of 10” and promised to reduce tariffs on Chinese goods, market evidence suggests that this political rhetoric has not significantly altered investor expectations.

Instead of consolidating at higher levels, New York’s major stock indices fell in the days following the leaders’ meeting, reflecting a latent skepticism about the deal’s durability.

Just one day after Trump’s upbeat remarks, the S&P 500 dropped about 1%, retreating from its historic peak, the Dow Jones Industrial Average fell 0.2%, and the Nasdaq, dominated by large tech stocks, slid roughly 1.6%.

This pattern indicates that, despite the White House’s optimistic narrative, the market saw no signs of a sustained boost in investor sentiment. Global exchanges also reacted cautiously, with Asian and European indices fluctuating as investors awaited clearer indications of the deal’s practical impact.

Analytically, the gap between “political hype” and “real market response” can be attributed to several factors:

1. Trump’s unpredictable behavior

Over the years, he has frequently made abrupt decisions regarding tariffs, trade agreements, and policy positions. This track record has left investors—both retail and institutional—wary of placing too much trust in his statements. For markets, a president who exhibits inconsistent economic messaging means that even apparently “positive” agreements are viewed as fragile, temporary successes.

2. Structural tensions in U.S.-China trade

The trade war goes beyond a series of import tariffs. At its core are deep-rooted disputes over intellectual property, advanced technology, market access, and industrial policy’s geopolitical dimensions. A few tariff reductions or promises to increase exports cannot resolve these structural conflicts. Markets understand that the so-called “tariff agreement” is merely a temporary truce between two economic powers, not a lasting peace.

3. Domestic economic and political conditions in the U.S.

U.S. markets currently face simultaneous uncertainties: fears of resurgent inflation and Federal Reserve tightening, combined with a politically charged environment shaped by election battles and Trump’s ongoing legal cases. In such a climate, any foreign agreement—even with the world’s second-largest economy—only carries weight if it coincides with domestic political stability and policy predictability. The absence of such assurances has left Wall Street cautious, resisting the pull of political hype.

In short, while the Trump-Xi meeting may have been symbolically positive, it has done little to satisfy investors’ built-up expectations. The tariff agreement is seen less as a strategic economic breakthrough and more as a political gesture, with markets keeping a watchful, skeptical eye on its real-world effects.