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President Donald Trump said he is willing to lower tariffs on China at some point because the levies now are so high that the world’s two largest economies have essentially stopped doing business with each other.

Trump has placed tariffs as high as 145% on Chinese imports. China has retaliated with tariffs of 125% on American imports. The moves rattled markets and threaten to drive up prices for manufacturing equipment as well as affordable goods that many Americans rely on, including clothing and toys.

“At some point, I’m going to lower them, because otherwise, you could never do business with them, and they want to do business very much,” Trump said in an interview that aired Sunday on NBC’s Meet the Press with Kristen Welker.

He noted recent economic pains in China, where factory activity has slipped into the worst contraction since 2023, according to the official manufacturing purchasing managers’ index. New export orders fell to the lowest since December 2022 and recorded the biggest drop since April that year, when Shanghai entered a citywide pandemic lockdown.

Trump also praised some statements that China made recently as “positive”, while reiterating that any deal between the two countries would reach has to be “fair.”

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On Wednesday, Reuters reported that China quietly created a list of US-made products that would be exempted from its 125% tariffs.

China has already exempted select products, such as some pharmaceuticals, microchips, and aircraft engines. However, retaliatory measures that were enacted in February and March against China-bound imports of certain items, such as petroleum products, agricultural equipment, soy, and chicken, among others, remain in effect.

As the chart below shows, China has worked to diversify its imports and exports over the years, and currently ships in a variety of products made in the United States, from agricultural products to advanced semiconductors.

As it stands, China's tariffs on US-made goods already pose uneven effects on US states. A contraction in the exports of oilseeds and grains, the United States’ largest export to China, could affect states in the Midwest. North Carolina and Indiana, meanwhile, lead in exports of pharmaceuticals to China.

If the US and China are unable to deescalate tariffs more broadly, sector-specific exemptions may exacerbate tariff disparities across companies, sectors, and states.

It felt much longer, but the U.S. stock market needed just a few weeks to roar all the way back to where it was on President Donald Trump's “Liberation Day.” That's when he shocked Wall Street by announcing much steeper tariffs than expected on nearly all U.S. trading partners.

Those tariffs unveiled on April 2 were so severe that they raised fears Trump did not worry about causing a recession in his attempt to reshape the global economy. Within just four days, the S&P 500 fell about 12%, and the Dow Jones Industrial Average lost nearly 4,600 points, or about 11%.

This past Friday, though, the S&P 500 rallied 1.5% for a ninth straight gain and pulled back to where it was on April 2.

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Yahoo Finance's Dan Howley reports:

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More signs emerged in a wave of reports this week that global manufacturing is buckling from President Donald Trump’s trade war.

Purchasing manager indexes across Asia, along with revised numbers in Europe on Friday, showed new or persisting contractions in factory activity in April.

The reports capped a flurry of worrying signals: Few economies are avoiding the concussion of tariffs and paralyzing uncertainty that’s engulfed the world economy one month after the US president announced widespread taxes on American imports.

Releases earlier in the week revealed damage in the two main combatants, whose tariffs have effectively shut off incentives for trade between nations that account for more than 40% of global GDP. A report Thursday showed US manufacturing activity shrank by the most in five months, a day after data revealed Chinese factories slipped into the deepest contraction since December 2023.

Factory sentiment is unlikely to turn around until there is clarity on where tariffs are headed — which may take time, said James Knightley, chief international economist at ING.

“The on-off-on-off nature of the tariffs is creating huge uncertainty and that is leading to businesses sitting on their hands,” Knightley said. “They won’t make big decisions until they have some confidence that there won’t be another immediate change in the economic environment.”

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It's been a big week for corporate earnings, and tariffs continued to be a major theme that executives addressed.

Here's a look at what the leaders of three major consumer-facing companies said in their earnings calls about the impact of tariffs on pricing and supply levels.

Newell Brands (NWL): We accelerated and then paused inventory orders from China

The maker of Rubbermaid, Sharpie, and Yankee Candle announced a 10% price increase, but said it has not priced for the 125% tariff rate on Chinese goods yet.

"We have probably three or four months of inventory on hand in the US that is not subject to the tariff," Newell Brands CEO Chris Peterson said, noting that the company accelerated inventory orders into the US.

"We've also paused additional input or orders of inventory from China at this point. So we're not paying the tariff at this point. At some point, we will begin to run out of inventory. Retailers will begin to run out of inventory, and we will turn back on reordering from China."

eBay (EBAY): We are educating customers about tariff price hikes, delays

The CEO of eBay said that it has started messaging on its checkout pages about the duties that customers pay.

"Our SpeedPAK shipping program manages much of the complexity of international shipping for [cross-border trade] sellers," eBay CEO Jamie Iannone explained. "Items shipped through SpeedPAK also have tariff duties included in the total price at checkout, creating greater transparency for buyers."

"For non-SpeedPAK purchases, we are managing expectations for buyers by educating them on the new costs, information requirements, and potential delays associated with international shipments. This includes messaging on the view item and checkout pages on eBay as well as localized information pages with up-to-date guidance amid rapidly changing policy."

Kraft Heinz (KHC): We are working to minimize price hikes

"We are trying to do everything we possibly can to minimize the amount of price necessary," Kraft Heinz CFO Andre Maciel said. "We have anticipated some purchases. We are looking at alternative sourcing. There is opportunity for, in some cases, reformulation, which takes a little bit longer. There are opportunities on the mix side. There are certain SKUs within the categories that are less impacted than others when it comes to tariff."

"So we are taking all the possible levers," Maciel said, "but pricing might be as a side."