Stocks drop as Trump claims China has ‘violated’ trade agreement and tensions flare

 

Markets Tumble as Trump Accuses China of Trade Deal Violations

U.S. stock markets experienced significant declines on Friday, May 30, 2025, following President Donald Trump's public accusation that China has "totally violated" a recently established trade agreement. The agreement, reached in early May, aimed to deescalate ongoing trade tensions by reducing mutual tariffs and initiating a 90-day negotiation period for a long-term resolution.

President Trump made the accusation via a post on Truth Social, expressing frustration over China's alleged non-compliance with the deal's terms. While specific details were not provided, U.S. Trade Representative Jamieson Greer pointed to China's continued countermeasures, such as blacklisting U.S. companies and restricting critical minerals, as evidence of non-compliance. Treasury Secretary Scott Bessent confirmed that longer-term talks have stalled and suggested that high-level discussions between Trump and Chinese President Xi Jinping may be necessary to move forward.

The market reacted swiftly to the escalating tensions. The S&P 500 fell by 0.6%, the Dow Jones Industrial Average lost 0.2%, and the Nasdaq Composite dropped 1.1%. Investors expressed concerns over the potential for a renewed trade war and its implications for global economic growth.

Adding to the market's unease, a U.S. trade court ruled that the administration lacked authority to enforce some tariffs, though an appeals court temporarily allowed them to continue during legal proceedings. This legal uncertainty further contributed to investor anxiety.

The situation remains fluid, with the potential for further market volatility as developments unfold. Investors are advised to monitor the situation closely and consider the implications for their portfolios.