In recent weeks, the United States and China have been locked in a tit-for-tat tariff battle, each waiting for the other to finally flinch.

And it seems that U.S. President Donald Trump is the first one to flinch. At an interview at the White House on Tuesday, President Trump signaled a dramatic shift in his administration’s approach to the ongoing trade war with China, announcing that the record-high tariffs on Chinese goods—currently at 145%—will “come down substantially, but it won’t be zero”.

Trump's statement seems to suggest a notable softening of Trump’s previously hardline stance after months of escalating tit-for-tat measures that rattled global markets and disrupted supply chains.

Tariff war sending shockwaves throughout the stock market

Trump’s remarks came in response to Treasury Secretary Scott Bessent’s earlier statement that the current tariff rates between the US and China are unsustainable and have effectively brought trade between the two economic giants to a standstill.

Bessent, speaking at a private JP Morgan Chase investment conference, suggested that a de-escalation is likely in the near future, emphasizing the administration’s goal to “rebalance” trade rather than pursue a complete decoupling.

The prospect of lower tariffs sparked a rally on Wall Street, with all major US indices surging to daily highs following the news. Asian markets followed suit, with Hong Kong’s Hang Seng Index and Japan’s Nikkei 225 both closing up over 2%.

Trump chickened out Trend on Chinese platform Weibo

When asked about Trump's statement and Bessent's comments on the Wednesday, China's Foreign Ministry criticised U.S attempts to use threats and coercion to force China into submission, saying it should have engaged in a proper conversation based on equality, mutual respect and reciprocity.

It further adds that China does not want to engage in a "fight" with the U.S, and they are always open to have a civil and proper conversation with the U.S. But China also stated this doesn't mean they are afraid to engage in a fight. If there is a need to, they won't hesitate to fight till the end.

Trump's shift in tone was quickly picked up by Chinese social media, triggering a chinese trend titled "Trump Chickened out" on Chinese social media platform Weibo, which has racked more than 1250 million views.

Throughout the whole tariff war, China has stook its ground and stuck to a defiant tone and refused to back down. Instead, it retaliated by raising tariffs on U.S goods to 125%, adding more American companies on its export control list and unreliable entry list. And restricting the export of critical minerals used in everything from iPhones to missile systems.