Paul Tudor Jones Expects Market To Hit New Lows Even If Trump Cuts China Tariffs: Report

Billionaire hedge fund manager Paul Tudor Jones reportedly stated on Tuesday that the market will hit new lows even if U.S. President Donald Trump reduces the tariffs on China, arguing there would be no relief unless the Federal Reserve becomes dovish.

“For me, it’s pretty clear. You have Trump who’s locked in on tariffs. You have the Fed who’s locked in on not cutting rates. That’s not good for the stock market,” Jones said, according to a CNBC report. “We’ll probably go down to new lows, even when Trump dials back China to 50%.”

According to the White House, China faces up to a 245% tariff on imports to the U.S. due to its retaliatory actions. This includes a 125% reciprocal tariff, a 20% tariff to address the fentanyl crisis, and Section 301 tariffs on specific goods, between 7.5% and 100%.

Last week, China said it is considering the possibility of trade negotiations with the U.S.

“He’ll dial it back to 50% or 40%, whatever. Even when he does that ... it’d be the largest tax increases since the 60s,” Jones said, according to the report.

“So you can kind of take 2%, 3% off growth.”

Jones also pointed toward the Federal Reserve's reluctance to cut rates and said he expects policymakers to wait for greater clarity on trade policies before making any policy adjustments.

“Unless they got really dovish and really, really cut, you’re probably gonna go to new lows,” Jones stated. “And then when we’re new lows, the hard day will start to follow, and it’ll probably create the Fed to move, create Trump to move. And then we’ll get some kind of reality.”

According to the latest data on the CME FedWatch Tool, traders have factored in a status quo policy this week and dialed down their expectations for the full year to a 75 basis point reduction compared to a full 100 basis points earlier.

Meanwhile, U.S. benchmark indices recorded losses on Tuesday as investors braced themselves for Fed Chair Jerome Powell’s remarks, something that tends to carry more weight than the policy outcome itself in these times.

The SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500, traded 0.75% lower on Tuesday morning, while the Invesco QQQ Trust, Series 1 (QQQ), which tracks the Nasdaq Composite, was down 1.02%.

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