Mr Trump’s decision to consider backing down in his trade war comes as the harm it has caused America’s economy becomes clearer. Trade shipments between China and the US are collapsing and a critical survey of American businesses shows growth in activity slumped to a 16-month low.

Comments from the president and Treasury Secretary Scott Bessent raised expectations that the economic rivals could find a way to reduce the intensity of the trade war.

U.S. markets opened with big gains and clear signs of relief after President Donald Trump said he would not attempt to fire the head of the Federal Reserve. U.S. Treasury Secretary Scott Bessent also said Tuesday that the ongoing tariffs showdown against China is unsustainable and he expects a “de-escalation” in the trade war