Wall Street Gains as Global Trade Tensions Ease Despite Record U.S. Trade Deficit in March

U.S. equity markets rose on Tuesday, with the Dow Jones Industrial Average achieving its longest winning streak of 2025. Investors were encouraged by easing global trade tensions and a temporary reprieve on auto tariffs, despite a record U.S. trade deficit of $162 billion in March. The market focused on positive trade diplomacy and corporate earnings. The U.S. is progressing in trade talks with countries like South Korea and Vietnam, but formal negotiations with China remain absent, contributing to ongoing uncertainty in U.S.-China trade relations.

Markets Climb as Trade Sentiment Improves

Wall Street closed firmly in the green on Tuesday, with the Dow, S&P 500, and Nasdaq all posting gains. The rally was fueled by a combination of upbeat corporate earnings and renewed optimism over global trade developments. Investors appeared to shrug off a record-high U.S. goods trade deficit, instead focusing on the White House’s recent moves to de-escalate tariff tensions and re-engage with key trading partners.

The Dow extended its longest winning streak of 2025, while the S&P 500 and Nasdaq also advanced, buoyed by a wave of earnings reports and a policy shift that offered relief to automakers. The administration’s decision to exempt auto imports from overlapping tariffs was seen as a significant gesture toward reducing trade friction, particularly with European and Asian partners.

Record Trade Deficit Fails to Dampen Market Optimism

The U.S. Commerce Department reported that the goods trade gap widened by 9.6% in March to a record $162 billion. Imports surged by $16.3 billion to $342.7 billion, while exports rose by a more modest $2.2 billion to $180.8 billion. Analysts attributed the spike in imports to businesses front-loading shipments ahead of anticipated tariff hikes.

Despite the concerning trade data, markets remained resilient. Analysts suggest that the deficit, while historically large, was overshadowed by the broader narrative of easing trade tensions and the potential for future policy coordination.

Progress in Trade Talks with Key Partners

The U.S. has made visible progress in trade negotiations with several countries. According to the Office of the U.S. Trade Representative (USTR), discussions with South Korea and Vietnam have advanced, with both sides agreeing to pursue “expedient and meaningful progress” toward balanced trade. Technical teams have been instructed to continue talks in the coming weeks.

Commerce Secretary Howard Lutnick also claimed that a deal with one unnamed country was “done,” pending parliamentary approval. Meanwhile, Treasury Secretary Scott Bessent stated that the U.S. is actively negotiating with 17 of its top trading partners, including India and Japan, using a standardized template approach to streamline the process.

However, China remains a notable exception.

No Direct Line to China Yet

Despite President Trump’s assertions that talks with China are ongoing, Beijing has repeatedly denied the existence of any formal negotiations. China’s Ministry of Commerce stated that “no economic and trade negotiations” are currently taking place and called on Washington to eliminate all unilateral tariffs if it hopes to resolve the dispute.

While U.S. officials, including Agriculture Secretary Brooke Rollins, have mentioned “daily conversations” with Chinese counterparts, these appear to be limited to working-level communications. Analysts note that such interactions, while potentially meaningful, do not constitute formal negotiations under China’s definition.

The lack of direct, high-level engagement between Washington and Beijing continues to cast uncertainty over the trajectory of U.S.-China trade relations. No official calls between President Trump and President Xi Jinping have been reported since mid-January.

Market Sentiment Shifts from Panic to Cautious Optimism

The White House’s renewed willingness to engage in trade diplomacy has helped shift investor sentiment. “Although negotiations may progress slowly, the White House’s renewed willingness to engage has shifted market sentiment from panic selling to cautious optimism,” said Dilin Wu, research strategist at Pepperstone Group, in a note cited by Bloomberg.

This shift has also impacted commodity markets. Gold prices have come under pressure as investors rotate out of safe-haven assets, while crude oil has declined amid concerns over weakening global demand and rising inventories. Analysts attribute the oil slump to the ongoing trade war’s drag on economic activity and planned supply increases from OPEC+.

Corporate Earnings Add to Market Momentum

In addition to trade developments, a flurry of corporate earnings reports contributed to the market’s upward momentum. While some companies, such as Starbucks, missed forecasts, others provided enough positive guidance to reassure investors.

However, the earnings season has also revealed underlying economic fragilities. Several multinational firms, including General Motors, Electrolux, and Porsche, have revised or withdrawn their 2025 forecasts, citing uncertainty stemming from trade policy and macroeconomic volatility.

Policy Uncertainty Remains a Key Risk

Despite the recent rally, analysts caution that the market’s optimism may be fragile. “Upside risks include a quicker reversal in sentiment from lower policy uncertainty,” wrote Inui, a market strategist, “while downside risks include further tariff hikes with no de-escalation and a fast deterioration in job markets.”

The Trump administration’s tariff policy continues to evolve, and while recent moves suggest a softening stance, the lack of clarity on long-term strategy—especially regarding China—remains a source of concern for businesses and investors alike.

References

• Stock market today: Dow extends longest win streak of 2025 as S&P 500, Nasdaq climb after latest tariff relief
• Stock market today: Dow extends longest win streak of 2025 as S&P 500, Nasdaq climb after latest tariff relief
• Trump tariffs live updates: Automakers get reprieve as Bessent, Lutnick tout deal progress
• U.S. Continuing to Hold Trade Talks with Foreign Partners | Sandler, Travis & Rosenberg, P.A.
• Analysts Say Trade Talks With the US Are Ongoing, but China Can’t Say It
• No Talk, but Some Action on U.S.-China Tariffs