US stocks fell on Friday, snapping a recent winning streak, after President Donald Trump accused China of violating its preliminary trade agreement — a move that reignited concerns of a prolonged trade conflict between the world’s two largest economies.
The Dow Jones Industrial Average slipped 59 points, or 0.1%, while the S&P 500 lost 0.4%. The Nasdaq Composite declined 0.6%.
Trump’s comments, posted on social media, alleged that China had breached terms of the current trade deal, echoing earlier remarks from Treasury Secretary Scott Bessent, who said US-China negotiations were “a bit stalled.”
The renewed rhetoric and uncertainty spooked markets that had been buoyed by recent trade progress elsewhere.
Still, May marked a strong rebound for equities. The S&P 500 is up over 5% for the month, while the Nasdaq has surged 9.5%, thanks in part to optimism over a US-UK trade pact struck earlier this month. The Dow gained 3% in May.
Trump says China violated trade deal
President Trump accused China on Friday of “totally violating” a preliminary trade agreement with the United States, signaling a potential escalation in tensions between the two countries.
In a post on his Truth Social platform, Trump suggested that retaliatory measures may follow, writing: “So much for being Mr NICE GUY!”
The remarks come just two weeks after the US and China agreed to a 90-day suspension of most tariffs imposed on each other’s imports, aimed at de-escalating a simmering trade war.
That truce came after Trump had imposed steep tariffs on Chinese goods, prompting Beijing to respond with its own set of countermeasures.
Trump claimed the initial tariffs had dealt a severe blow to China’s economy, stating: “Two weeks ago China was in grave economic danger!”
He said his administration’s actions led to factory closures and unrest in China, which in turn motivated him to negotiate a rapid agreement to ease tensions.
“I made a FAST DEAL with China in order to save them from what I thought was going to be a very bad situation,” he said.
However, according to Trump, China has since failed to uphold its end of the bargain. “Because of this deal, everything quickly stabilized and China got back to business as usual… The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US,” he wrote.
Treasury Secretary Scott Bessent also commented on the situation during a Fox News interview Thursday, acknowledging that trade talks with China are currently “a bit stalled.”
US inflation brings some good news
US inflation showed minimal movement in April, with the effects of President Donald Trump’s newly implemented tariffs yet to register in consumer prices, according to data released Friday by the Commerce Department.
The personal consumption expenditures (PCE) price index — the Federal Reserve’s preferred inflation gauge — rose just 0.1% month-on-month, aligning with economists’ expectations.
On an annual basis, inflation stood at 2.1%, slightly below the consensus estimate of 2.2%.
Core PCE, which strips out volatile food and energy prices and is more closely watched by Fed policymakers, also increased 0.1% for the month.
The year-over-year core reading came in at 2.5%, a notch below the expected 2.6%.
Consumer spending growth, meanwhile, cooled considerably. Outlays rose by just 0.2% in April, matching forecasts but falling from a 0.7% increase in March.
The data suggest growing caution among households, a trend underscored by a notable rise in the personal savings rate, which jumped to 4.9% — the highest level in nearly a year — up from 4.3% in March.
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