Forget the Fed. Why Stocks Are Focused on U.S.-China Trade Talks.

A journey of a thousand miles begins with a single step, goes the Chinese proverb.

Investors are hoping that first foot forward could be news that U.S. and Chinese officials will meet in Switzerland to talk this weekend. Trade between the world’s two biggest economies is at a standstill, and keeping it that way grows more painful by the day.

China certainly seems to be feeling the pain—the country’s central bank cut interest rates Wednesday and Beijing unveiled a raft of stimulus measures.

Before that, just as the stock market thought it was out of its tariff slump, it was pulled back in. Following the best winning streak in two decades, there were two days of declines in the S&P 500 to start the week. It’s no coincidence that the losses came as President Donald Trump proposed new tariffs on movies and pharmaceuticals.

The upcoming summit isn’t the only good news. While the meeting between Trump and Canadian Prime Minister Mark Carney was awkward, it didn’t seem too acrimonious. Earnings from U.S. electric-vehicle makersLucid and Rivian on Tuesday, while affected by tariffs, were good enough. It was a similar story for chip maker Advanced Micro Devices—the outlook is strong, but export controls will hurt.

The lesson of the trade wars so far is that selling can be just as dangerous as buying, because shares can quickly swing back up. It still seems like a reasonable strategy to hang in there while the turmoil plays out. Maybe, just maybe, most if not all of the tariffs will be dropped when the 90-day reprieve expires on July 8.

On the day of the latest interest-rate decision from Chair Jerome Powell, it’s unusual for markets to see the Federal Reserve playing second fiddle. But that’s exactly what’s happening. Investors need a truce in the trade war to keep buying, and that’s beyond Powell’s control.

—Brian Swint

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Talks Boost Hopes of an End to Trade War

Senior U.S. administration members are slated to meet with Chinese officials for the first time since a trade war began between the two countries, leading to optimism around lowering tariffs on imports.

• Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer will meet with Chinese officials in Switzerland on Saturday and Sunday. Bessent said in an interview with Fox News that the talks are likely to center on “de-escalation” rather than reaching a trade deal.
• China’s Ministry of Foreign Affairs said Vice Premier He Lifeng will meet with the U.S. officials in Geneva, noting he is “the Chinese lead person for China-U. S. economic and trade affairs.” A ministry spokesman said Wednesday the U.S. requested the talks.
• President Donald Trump has imposed 145% tariffs on Chinese goods, and Beijing has retaliated with 125% duties on American goods. The measures have led to a sharp reduction in the levels of freight traffic between the two countries.

What’s Next: While the beginning of talks is positive for the markets, a final deal on lowering tariffs is likely to require a meeting between Trump and Chinese President Xi Jinping which could take many months to come about.

—Adam Clark

Trump Tells Canada’s Carney Nothing Will Lift U.S. Tariffs

President Trump doubled down on tariffs Tuesday during Canadian Prime Minister Mark Carney’s visit to the White House. Trump said there was nothing Carney could say that could get Trump to lift the U.S.’s levies on Canada. “It’s just the way it is,” Trump said.

• Earlier Tuesday, Trump posted on Truth Social that the U.S. doesn’t need Canada’s energy or lumber, saying: “we don’t need ANYTHING they have,” whereas Canada needs “EVERYTHING from us!” He told Carney that “We want to make our own cars.”
• Carney was elected prime minister on a “Canada Strong” platform partially in response to Trump’s rhetoric. When Trump said Canada should become part of the U.S., Carney said Canada would never be for sale. Trump responded: “Never say never.”
• Treasury Secretary Scott Bessent appeared Tuesday before the House Financial Services and General Government Subcommittee to defend the Trump administration’s economic policies, including his broad trade tariffs, lifting the debt ceiling, and extending his 2017 tax cuts.
• At one point, Rep. Mark Pocan (D., Wisc.) repeatedly asked Bessent: “Who pays tariffs?” Bessent replied: “It’s a very complicated question.” Pocan, who runs a small specialty printing business in Wisconsin, said he is already seeing tariff surcharges from his suppliers.

What’s Next: The outcome of Carney’s talks with Trump is particularly important for the U.S. and Canadian automotive industries, which have been integrated for decades. Canada is also a key source of lumber, fertilizer, and energy for the U.S.

—Janet H. Cho

Real ID Requirement For Domestic Air Travel Begins Today

Today is the day U.S. air travelers must have Real ID-compliant driver’s licenses or state-issued identification, or an alternative such as a passport, to board federally regulated commercial aircraft. Those without Real IDs can expect delays, additional screening, and potentially not being allowed into security checkpoints.

• Requiring Real IDs increases safety by making fraudulent IDs harder to forge, thwarting criminals and terrorists, according to the Transportation Security Administration. Travelers might have to complete an identification verification process or face further screening.