President's comments follow Chinese government's denial of 'baseless' claim that Washington was close to deal

In a surprising shift, President Donald Trump acknowledged that the current 145% tariffs on Chinese imports are 'very high' and hinted at a substantial reduction in the future, although he did not promise that they would fall to zero. This is a notable change from his earlier, more aggressive stance, as he stated, 'It'll come down substantially.' This softer tone marked a departure from his previous conduct in April, suggesting a potential thaw in U.S.-China trade relations, even in the absence of formal negotiations at this time. Conversely, China's Foreign Ministry spokesperson Guo Jiakun adopted a defensive posture, asserting that while China does not seek a conflict, it is prepared to engage fully should the conflict escalate, stating, 'We don't want to fight, but we are not afraid of it. If we fight, we will fight to the end; if we talk, the door is wide open.' This rhetoric underscores the tension underpinning U.S.-China relations, characterized by both the desire for negotiation and the possibility of further conflict. In a related context, U.S. Treasury Secretary Scott Bessent expressed optimism that there exists an 'opportunity for a big deal' regarding trade issues with China, advocating for a collaborative effort to rebalance relations. This aligns with the recent rally in U.S. markets, which reacted positively to Trump's moderated comments, leading to significant gains for major indexes. However, a legal backdrop continues to unfold, as a number of states have sued Trump's administration over the legality of the tariffs, claiming they exceed presidential authority and equate to an undeclared tax. New York Attorney General Letitia James pointed out the unpredictable nature of Trump's tariff policies, highlighting the ongoing uncertainty they introduce to the U.S. economy. This news points to a complex interaction of domestic policy, international relations, and economic implications, leaving businesses and investors watching closely for Trump’s next moves on tariffs and trade, while the broader market their reactions amid this volatile environment. Overall, the dynamics are fluid, with potential implications for future talks and agreements between the nations. Additionally, the unrest resulting from Trump's tariffs may compel regions and nations to collaborate against perceived aggression, as demonstrated by the comments from Swiss officials regarding collective responses to U.S. policy. The fluctuations in tone from the White House and the proactive stance from foreign counterparts reinforce the current state of uncertainty surrounding the ongoing trade tensions, as both sides weigh risks and opportunities in a fraught geopolitical landscape.