Gold zooms, Dow sinks on Trump’s Powell and tariff tantrum

·       Trump’s attempt to influence Fed Chair Powell for rate cuts to boost market sentiment amid his trade war agenda affecting the credibility of USD/UST

·       Trump is also trying to isolate China by pressuring other countries to impose sanctions on China and restrict trade

On Thursday, April 17, 2025, Wall Street closed mixed. The S&P 500 edged up 0.15% buoyed by strong gains from Eli Lilly after reporting its experimental weight-loss pill matched the performance of Ozempic in a diabetes trial. In contrast, the Dow Jones (DJ-30) plunged 500 points, led by a slump in UnitedHealth shares amid subdued guidance due to Trump’s policy tantrum on pharmaceuticals and healthcare. The Nasdaq 100 closed almost flat, supported by Apple's gain. Wall Street suffered weekly losses ahead of the Good Friday long weekend. The Dow and Nasdaq-100 fell 2% for the week, while the S&P 500 was down nearly 1% amid escalating Trump trade war tantrum.

During the Easter weekend, President Trump made several comments regarding the ongoing trade war, tariffs, and China. These remarks reflect his stance on the escalating trade tensions and his approach to negotiations with China.

Trump’s comments: Market dancing to Trump tunes

April 18, 2025:

·       Trump expressed optimism about reaching a trade deal with China, stating: "We're going to have a deal with China"

·       Trump even suggested that Chinese President Xi Jinping had reached out directly, saying, "Pretty obvious Xi has reached out directly."

·       Trump also indicated a desire to avoid excessively high tariffs, noting, "If tariffs go too high, people won't buy," suggesting a pragmatic approach to balancing trade pressure with consumer impact.

·       Trump mentioned that a potential TikTok deal would be delayed until trade issues with China were resolved, stating, "We have a deal for TikTok, but it'll be subject to China so we'll just delay the deal 'til this thing works out one way or the other."

April 19, 2025:

·       Speaking in the Oval Office, Trump reiterated his concern about tariff levels, saying, "At a certain point, I don’t want them to go higher… you want people to buy," acknowledging the risk of tariffs deterring consumer purchases amid the 145% U.S. tariffs on Chinese goods and China’s 125% retaliatory tariffs.

·       He also claimed that tariffs were financially beneficial, declaring, "Tariffs are making us rich—we are collecting about 200 billion dollars every day”

·       Trump expressed confidence in securing a favorable deal with China, stating, "We have plenty of time."

·       These comments reflect his belief in the leverage provided by tariffs while signaling openness to negotiations.

Overall, Trump’s comments during this period consistently framed China as a key focus of his tariff policy, with tariffs on Chinese goods reaching 145% after incremental increases.

·       Trump maintained that China is eager to negotiate, claiming, "China also wants to make a deal, badly, but they don’t know how to get it started. We are waiting for their call."

·       However, Trump also called China a "hostile trading nation" in a social media post, emphasizing ongoing tensions while noting that electronics like smartphones were subject to a lower 20% tariff due to fentanyl-related trade measures.

These statements highlight Trump’s dual approach of escalating trade pressure through high tariffs while expressing confidence in eventual negotiations with China. Trump is looking stressed and tensed as at the end of the day, the US has to import substantial consumer and industrial goods from China; it has no viable alternative- at least till 2026, the mid-term US election. Contrary to Trump’s narrative that China or any other exporters are paying Trump tariffs of ‘hundreds of billions of dollars’; US importers are paying these and ultimately US consumers have to bear these Tariffs. Thus Trump is now urging for China trade deal 2.0.

Trump is now also pressuring Fed Chair Powell for an immediate resumption of rate cut cycles. Trump may be also discussing internally to remove Powell before his term ends in May’26. During the Easter weekend, President Trump made several critical remarks about Federal Reserve Chair Jerome Powell, focusing on monetary policy, interest rates, and Powell’s role in the context of the escalating trade war and economic pressures.

On April 18, 2025: Trump intensified his criticism of Powell, accusing him of mishandling monetary policy and contributing to economic risks amid high tariffs. He claimed Powell’s refusal to lower interest rates was exacerbating inflationary pressures from the 145% tariffs on Chinese goods. According to reports, Trump reiterated his belief that Powell was a liability, stating, "Powell’s not helping with the economy," and suggested that the Fed’s policies were misaligned with his trade strategy. Trump also hinted at ongoing internal discussions within his team about potentially removing Fed Chair Powell.

On April 19, 2025, Trump continued his attacks, blaming Powell for not cutting interest rates to offset the economic strain caused by tariffs and trade tensions with China. In a reported statement, he said, "Jerome Powell is holding back the economy by keeping rates too high," emphasizing that lower rates were necessary to maintain growth. Trump is also accusing Powell of political bias, claiming Powell had "lowered rates to help the other side before the election.”

On April 21, 2025, Trump’s most direct comments on this date, as reported, focused on the urgency of lowering interest rates to prevent an economic slowdown. He stated, "The U.S. economy could slow down unless interest rates are lowered immediately," explicitly tying Powell’s inaction to potential economic harm. He further labeled Powell a "major loser" in a social media post, accusing him of aiding political opponents in the past by manipulating rates. These remarks underscored Trump’s frustration with the Fed’s or Powell’s independence and his belief that the Fed should support his tariff-driven economic agenda.

Trump’s comments reflect his ongoing campaign to pressure the Federal Reserve into aligning with his economic policies, particularly as the trade war with China (marked by 145% U.S. tariffs and 125% Chinese retaliatory tariffs) and other tariff policies have caused capitulation of both Wall Street and Main Street. His criticisms of Powell consistently framed the Fed Chair as an obstacle to economic growth, with accusations of political bias and mismanagement; the broader narrative suggested he was exploring legal and political avenues to challenge the Fed’s independence and also Powell’s removal.

Trump wants to appoint a ‘puppet’ Fed Chair, remote-controlled by him. Trump’s consistent attempt to remove Powell and interfere in the Fed’s independence is eroding the credibility of US politics, and policies and also harming USD/UST; German, UK and even Indian bonds and currencies are appreciating against USD, while Gold is zooming to new life time highs almost every other day; now around $3427. Gold surged to a record as Trump threatened Fed independence.

Trump’s Truths about trade, tariffs and Fed Chair Powell: Wall Street sinking

Apr 21, 2025: Trump warned Fed Chair Powell to cut rates and help him continue the Trade war

“Preemptive Cuts” in Interest Rates are being called for by many. With Energy Costs way down, food prices (including Biden’s egg disaster!) substantially lower, and most other “things” trending down, there is virtually No Inflation. With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW. Europe has already “lowered” seven times. Powell has always been “Too Late,” except when it came to the Election period when he lowered in order to help Sleepy Joe Biden, later Kamala, get elected. How did that work out?

Apr 21, 2025: Trump wants not only tariff cuts but also local sales taxes and other internal policies and regulations of all other countries

“NON-TARIFF CHEATING:

1. Currency Manipulation

2. VATs which act as tariffs and export subsidies

3. Dumping Below Cost

4. Export Subsidies and Other Govt. Subsidies

5. Protective Agricultural Standards (e.g., no genetically engineered corn in EU)

6. Protective Technical Standards (Japan’s bowling ball test)

7. Counterfeiting, Piracy, and IP Theft (Over $1 trillion a year)

8. Transshipping to EVADE Tariffs!!!”

April 20, 2025: Trump boasted about his Liberation Day reciprocal tariffs

“Since our announcement of LIBERATION DAY, many World Leaders and Business Executives have come to me asking for relief from Tariffs. It’s good to see that the World knows we are serious, because WE ARE! They must right the wrongs of decades of abuse, but it won’t be easy for them. We must rebuild the Wealth of our Great Country, and create true RECIPROCITY. But for those who want the easiest path: Come to America, and build in America!”

April 18, 2025: Trump also criticized corporate America as most of them are not supporting his bellicose tariff policies

“THE BUSINESSMEN WHO CRITICIZE TARIFFS ARE BAD AT BUSINESS, BUT REALLY BAD AT POLITICS. THEY DON’T UNDERSTAND OR REALIZE THAT I AM THE GREATEST FRIEND THAT AMERICAN CAPITALISM HAS EVER HAD!”

On March 21, Trump said in a presser:

·       Trade talks with the EU have been fine

·       Trump asked about the EU: We'll end up having a deal

·       The economy has been good, and energy is down

·       Tariff negotiations going well

·       We're going to make a lot of money

·       Trump touts cars and steel tariffs

·       Good meetings on Ukraine and Russia

·       Also had good meetings in Iran

·       Tariffs going well, and everybody wants to negotiate

·       We need a little more time

·       Hegseth is doing a great job (The US Defense Secretary amid Signal Chat leak fiasco)

·       Good chance of a Russia, Ukraine deal this week

On April 21, Fed’s Goolsbee expressed Trump trade war uncertainty on Fed policies:

·       We've got short-run inflation expectations up, but long-run expectations not rising is very important

·       Fed needs to look at where things will be through the year, tariffs are one input

·       Productivity growth has been strong, I want to understand if tariffs affect that

·       The impact of tariffs on the macro economy could be modest

·       We need to wait it out to figure out what to do

·       It would be difficult if both sides of the Fed's mandate go wrong. It's also about magnitude and how long it lasts

·       I don't know what impact on supply chain will be. We want to be a steady hand

·       We've got short-run inflation expectations up but not long-term

·       Inflation rate higher in nations with political interference

·       I still believe rates will be lower in 12-18 months

Trump's trade and cold war with China may be escalating as Trump is trying to isolate China

As per the BBG report, China has warned countries against making trade deals with the US that harm Beijing's interests, escalating tensions in the ongoing U.S.-China trade war. The Chinese Commerce Ministry stated that Beijing will "firmly oppose" any agreements made at its expense and promised "resolute and reciprocal countermeasures" if such deals occur. This response was triggered by reports, including a Bloomberg article, suggesting that the Trump administration is pressuring nations seeking tariff reductions or exemptions from the U.S. to limit their trade with China, potentially through monetary sanctions.

The U.S. has imposed tariffs as high as 145% on Chinese imports, while China retaliated with 125% duties on U.S. goods, effectively creating mutual trade barriers. President Trump paused sweeping tariffs on other countries announced on April 2, 2025, but maintained the heaviest levies on China. Meanwhile, Chinese President Xi Jinping has been engaging Southeast Asian nations, urging them to resist "unilateral bullying" and emphasizing that there are "no winners" in trade wars.

Southeast Asian countries, part of ASEAN, are particularly caught in the crossfire, with significant trade ties to both powers—$234 billion with China in Q1 2025 and $476.8 billion with the U.S. in 2024. Nations like Thailand, Indonesia, and Malaysia are negotiating with the U.S. to avoid tariffs ranging from 32% to 49%, while Japan and Indonesia are considering increasing U.S. imports to secure relief. However, reliance on Chinese investment and markets makes many hesitant to fully align with U.S. demands.

China has also taken a hardline stance, planning to convene an informal UN Security Council meeting to accuse the U.S. of bullying and undermining global trade rules. Despite the rhetoric, Trump has claimed talks with China are ongoing, though Beijing has not confirmed this and insists on fighting the trade war "to the end." The situation reflects a broader struggle for economic influence, with both powers pressuring smaller nations to pick sides. As one analyst noted, "nobody wants to pick a side," especially countries deeply integrated with China’s economy. The outcome of these negotiations and China’s potential retaliatory measures could further disrupt global trade and economic stability.

Conclusions: The US may be risking global isolation in trade and Trump is already blinking

In Trump trade war 2.0, China holds a definitive strategic advantage due to its supply chain leverage, export diversification, and Xi’s domestic political buffer, which allow it to weather tariffs better than the U.S., where both Wall Street and Main Street are capitulating amid the plunge in the market and increasing public protest as Americans face immediate cost hikes.

Trump will gradually soften his hawkish China tariff narrative as he may be now realizing the reality that the US is still far away from becoming a viable alternative for the Chinese manufacturing hub; it’s not only the question of China’s relatively cheaper labor force, but China's extensive supply chain, infrastructure, and skilled workforce in supporting high tech industry. And China’s labor cost is now no longer cheap as China is also now a developed country at least urban China.

Also, the US is far behind in terms of China’s manufacturing and logistical infra. Apart from ordinary American consumers, various big US corporations and also MSMEs are largely dependent on China's supply chain for their requirements; it’s not easy to make the US or any other country a viable alternative to China to match their scale, efficacy, quality, and cost.

China will negotiate with the Trump admin in a mutually respectful environment; will never negotiate at gunpoint. But the question is why there is a requirement for another trade deal with China after a comprehensive trade deal in 2020 and that too after 2 years of marathon negotiations bet, why is there a need for another China trade deal? Trump should propose a 5-10% universal tariff and GST for every country, ensuring free & fair access for all.

Trump often blames the onus of the US merchandise trade deficit on China and other exporter nations including some of US allies. Trump also blamed China, Mexico, and even Canada for illegal drug and human trafficking into the US. But before blaming someone, Trump should have repaired their own house and introspected, why China is outpacing the US in trade, education, innovation, healthcare, infra development, techs, and even military jets.

The US has to reset now to compete with China rather than burning down in jealousy. Trump should also introspect why Americans are increasingly addicted to drugs and crimes. Drug addiction & supply chain is a global issue; no specific country can be blamed for this and it’s a collective responsibility also. Why the US is failing to prevent drug and human smuggling?

Trump needs higher revenue to fund his deficit spending like tax cuts and other planned infra stimulus. Thus he is eager to impose higher tariffs on Americans in the name of China & other exporters. Exporters will stop accepting orders from US importers rather than paying such Trump tariffs at gunpoint. China may even scrap the phase one trade deal with the US and even stop sending goods to the US.

In reality, the US and China are both dependent on each other for prosperity and development. Both the US and China have coexisted for decades in a win-win situation. Despite significant expansion & diversification in global trade, the US is China's number one client at around $500 billion annually.  For the US, China is also the largest market after the EU and many US MNCs are quite dependent on Chinese revenue.

The US may not find an alternative global or local supply chain instead of China and China may also face difficulties in finding a single alternative for America.  However, China is at an advantage due to its strategic expansion of trade globally for the last two decades rather than being too dependent on any single country or trade block like the US and EU. 

Thus we may soon see signs of reconciliations rather than engaging in protracted trade confrontations. Back channel talks may have already started between the US and China, which may take a definitive step towards a phase two trade deal by the next 90 days. China will negotiate from the position of strength, and mutual respect, not US bullying.

Trump Admin and its core advisory team are divided between China & tariff hawks and doves. Trump is also under pressure from his corporate donors & active advisors like Musk, various prominent Republican Leaders, and Wall Street along with Main Street. Thus Trump is now showing more compulsion for an immediate trade deal with China and blinking first.

America is not a manufacturing power hub; it has to import almost half of its domestic merchandise requirement. Cheaper imported goods help to maintain the overall lower cost of living and the Goldilocks nature of the US economy. If Trump's tariffs are implemented at face value, American families are -with estimates suggesting an average $1,300-$4000 increase per year for a person to a small typical family of three. This would be very difficult for a typical middle-class American family most of which live paycheck to paycheck.

Although Trump's logic about higher tariffs and targeted regulation on certain other countries is right, it does not apply to China, especially after the 2020 Phase One China trade deal. The US political and policy uncertainty is now a big headache for the rest of the world and also US investors.

Trump could have introduced Federal sales tax on goods & services like 10% GST or VAT along with a minimum basic universal tariffs of 5-10% globally coupled with no targeted non-tariff barriers by all countries. But this may not be the case and it's almost impossible to negotiate with 100-odd countries worldwide for a definitive bilateral trade deal within this short period of 90 days.

Thus eventually, Trump may scale back his reciprocal tariffs completely and may impose only a 5-10% universal basic tariff for all including China for the sake of the US economy. At the same time, Trump may provide fresh income tax cuts for American workers and businesses to undo the tariff damage on the US economy.

Trump will use reciprocal tariff threats on various countries like India to reduce its exorbitantly high tariffs and very stringent regulations against free & fair trade. India or even the US can't encourage inefficiencies by promoting higher tariffs and non-tariff barriers. Higher tariffs and local sales taxes cause higher cost of living and distort price stability. And without price stability, no economy can function properly as we have seen in the case of Tariff & GST King India.

Bottom line: The US and China are dependent on each other

Trump’s overall tone indicates back-channel negotiations between the two largest economies in the world, controlling almost 45% of global nominal GDP. The US and China may soon officially reach out to each other to resolve this trade issue. Trump may soon announce a 90-day pause for Chinese tariffs also, keeping only the 20% Fentanyl tariffs for the time being, which may be reduced to universal basic levels of 10% by the next few weeks after China takes some ‘bold steps’ in addressing the US concern of Fentanyl production & trafficking. Trump and Xi both will move after satisfying their respective domestic political compulsion.

Market impact:

Late Monday, Wall Street Futures slumped on Trump’s Powell tariff tantrum; Gold zoomed as Trump’s repeated attempt to influence the Fed and Powell to cut rates undermined the Fed’s independence; USD, and UST slumped. Oil surged as Israel was reportedly preparing itself for a potential Iran attack.

Weekly-Technical trading levels: DJ-30, NQ-100, and Gold

Looking ahead, whatever the fundamental narrative, technically Dow Future (CMP: 40700) now has to sustain over 40100 for a further rally towards 41300/42300-43300/44600, and even 45200 in the coming days; otherwise sustaining below 40000, DJ-30 may again fall to 39700/38600-38000/37700-37300/37000 in the coming days.

Similarly, NQ-100 Future (19000) has to sustain over 19300 for a further rally to 196000/20000-20900/21400 and even 22000-22400 in the coming days; otherwise, sustaining below 19250, NQ-100 may again fall to 18600/18000-17600/16400 and 16200-15800 in the coming days.

Also, technically Gold (CMP: 3240) has to sustain over 3265-3275 for a further rally to 3305/3335*-3355/3375*-3400/3425, and even 3450/3500-3525/3555 in the coming days; otherwise sustaining below 3255-3245, Gold may again fall to 3180/3130-3065/2990 and 2960/2900*-2800/2750 in the coming days.