Dow Jones stalls as China warns against fresh trade tensions

U.S. stocks opened flat on Tuesday as traders looked for gains following President Donald Trump’s delay of sweeping reciprocal tariffs and as China warned against a rekindling of trade tensions.

The Dow Jones Industrial Average was largely flat as the blue-chip index shed 40 points, while the S&P 500 was down 0.3% amid a slowdown from the benchmark’s record highs. A lull in early trading also saw the Nasdaq Composite fluctuate around the flatline, down 0.2%.

Stocks shed gains on Monday amid Trump’s fresh threats of tariffs against major trading partners, with the Dow falling more than 400 points and the S&P 500 closing 0.79% down. Nasdaq ended the day 0.92% lower. 

Although futures tied to the major gauges cut these losses as traders took note of the new August 1, 2025 tariffs deadline, the potential flare up in trade tensions is tempering the overall market mood.

In other market sectors, cryptocurrencies were also largely flat as Bitcoin (BTC) hovered near $108k. Meanwhile, oil prices steadied around $67.

China to “hit back” on tariffs

Trump’s move to issue fresh threats of duties against top partners, including Japan and South Korea, with possible 25% tariffs, had investors on edge. Other countries, Thailand, Malaysia, and South Africa, also face proposed tariffs of between 25% and 40% by August 1, according to the White House.

The U.S. and China appear to be back on a collision course over trade policy, despite the optimism that followed their June agreement. Following Monday’s warnings to multiple countries, China has now cautioned against pushing new tariff rates.

Beijing stated that further tariffs will only escalate trade tensions, and signaled readiness to retaliate against nations that enter deals with the U.S. under the exclusionary framework. The warning follows Trump’s threat against countries that align with BRICS at the expense of the U.S. in trade matters.

Outside the tariff landscape, investors will turn their focus to key economic data reports, the Federal Reserve’s minutes from its June meeting, and upcoming corporate earnings.