US stock markets closed higher but well off intraday highs on Wednesday, even as President Donald Trump pledged to reduce tariffs on China “substantially,” while denying intention to fire Fed Chair Powell. The S&P 500 surged by 3.6% before retreating sharply and finished 1.67% higher, although posting a second consecutive gain.

On Wednesday, the Wall Street Journal reported that the Trump administration is considering reducing tariffs on China to a range between 50% and 65%. A tiered approach may be adopted, with levies of 35% on goods deemed non-critical to national security, while retaining tariffs of at least 100% on essential Chinese imports. While these figures represent a sharp reduction from the current 145%, the proposed trade barriers remain significant.

However, Treasury Secretary Scott Bessent told reporters that there was no unilateral offer to lower tariffs on China, adding that the administration was considering measures beyond tariffs. Speaking at the Institute of International Finance in Washington, Bessent said there was “an opportunity for a big deal” on trade issues between the US and China.

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He argued that China should “graduate” from developing country status, stating: “There is no justification for this continued lending… Treating China — the second-largest economy in the world — as a ‘developing country’ is absurd.”

In addition, the Financial Times reported that the Trump administration is considering reducing tariffs on Chinese auto parts. However, Trump denied such a proposal and suggested he may raise import levies on Canadian auto components. Earlier this month, the US president imposed a 25% tariff on all auto imports, granting a one-month exemption for auto parts under the United States-Mexico-Canada Agreement (USMCA).

“While these latest developments obviously have bullish near-term implications, it all again speaks to the incoherent and volatile nature by which policy continues to be made,”  Michael Brown, a senior research stargetist at Perpperstone London, wrote in a note, “the ever-changing stances on display are likely to do nothing to stem the tide of the ‘sell America’ trade.”

Stock markets mixed

At 6 a.m. CEST, US stock futures declined during Thursday’s Asian session as uncertainty continued to mount. The Dow Jones Industrial Average was down 0.28%, the S&P 500 slipped 0.14%, and the Nasdaq Composite fell 0.22%. Investors remain wary amid policy and economic uncertainty driven by Trump’s erratic and unpredictable tariff plans.