The president's decision follows a week of speculation about who would succeed Kelly. The retired general is set to leave by year's end.
Mercedes and BMW both have big U.S. plants that each import more cars to China than Ford, GM and Fiat Chrysler combined.
China and the United States discussed the road map for the next stage of their trade talks on Tuesday, during a telephone call between Chinese Vice Premier Liu He and U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer.
Sources, who spoke on the condition of anonymity due to the privacy of the ongoing discussions, said that Mnuchin has indicated to his inner circle that he feels best served as the head of Treasury.
With no clear message or discernible strategy from the president on the China trade talks, what had seemed just a few days ago like it could be a shot in the arm to the U.S. economy, by Tuesday only added to the grim uncertainties facing investors.
In a series of Tuesday morning tweets, Trump showed optimism about reaching a "fair deal" with China but stressed that he is "a Tariff Man" if talks fail.
"It's the press that seems more obsessed with what may lie in the future," Commerce Secretary Wilbur Ross tells CNBC.
Stocks fell sharply on Tuesday in the biggest decline since the October rout as investors worried about a bond-market phenomenon signaling a possible economic slowdown. Lingering worries around U.S.-China trade also added to jitters on Wall Street.
The prominence U.S. Trade Representative Robert Lighthizer has in the negotiations could help to determine whether the White House takes a more aggressive or conciliatory approach to China.
Cashin, the UBS director of floor operations at the NYSE, says he expects that a hike is still "locked in" for December.
Trade negotiations between the U.S. and China will yield immediate results that will come even during the 90-day negotiation period ahead, National Economic Council Director Larry Kudlow said Monday.
The commitment to talks throws Trump into his most high-stakes period yet in his yearslong effort to crack down on what he calls unfair trade practices.
Treasury Secretary Steven Mnuchin joins 'Squawk Box' to discuss the U.S.-China trade war cease-fire, tax reform and the USMCA trade deal.
Treasury Secretary Steven Mnuchin joins 'Squawk Box' to discuss the U.S.-China trade war cease-fire, tax reform and the USMCA trade deal.
Treasury Secretary Steven Mnuchin joins 'Squawk Box' to discuss the U.S.-China trade war cease-fire, trade deficits and how Fed chair Jerome Powell is doing.
Treasury Secretary Steven Mnuchin says President Trump was pleased with Fed Chairman Jerome Powell's speech last week on interest rates.
Treasury Secretary Steven Mnuchin joins 'Squawk Box' to discuss the U.S.-China trade war cease-fire, trade deficits and how Fed chair Jerome Powell is doing.
Treasury Secretary Steven Mnuchin joins 'Squawk Box' to discuss the U.S.-China trade war cease-fire.
Treasury Secretary Steven Mnuchin joins 'Squawk Box' to discuss the U.S.-China trade war cease-fire.
China marks the 40th anniversary of its economic reforms and opening up on Dec. 18 — an occasion Beijing could use to emphasize its commitment to transform its economy, noted Scott Kennedy of the Center for Strategic and International Studies.
Data also provided by 
