Global equity markets surged on Monday following a breakthrough in US-China trade relations, as both nations agreed to a temporary 90-day truce in their ongoing tariff dispute. This move has injected optimism into global financial markets, despite leaving major structural issues unresolved.
During negotiations held over the weekend in Geneva, the United States announced a significant reduction in tariffs on Chinese goods, slashing rates from 145% to 30%. In a reciprocal move, China lowered its tariffs from 125% to 10%. The temporary deal was brokered by US Treasury Secretary Scott Bessent and Chinese officials, marking a notable, albeit short-term, de-escalation in a trade conflict that has disrupted nearly $600 billion in bilateral commerce.
Investors welcomed the development, pushing Wall Street to new heights. The S&P 500 closed at its highest level since early March, and the Nasdaq Composite climbed to peaks not seen since February. The US dollar gained strength while gold prices dipped, signaling a shift from safe-haven assets amid renewed market confidence.
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Despite the market rally, experts caution that the truce does not resolve deep-rooted disagreements over intellectual property rights, trade imbalances, and access to Chinese markets. These issues have long strained economic relations between the world’s two largest economies.
President Donald Trump celebrated the agreement, calling it a “win-win” for both countries and emphasizing China’s commitment to opening its markets more fully. However, US officials conceded that significant challenges remain, and the temporary nature of the deal reflects the complex nature of ongoing trade discussions. Treasury Secretary Bessent noted that it could take years to redefine the trade relationship between Washington and Beijing.
Chinese state media echoed a more conciliatory tone, highlighting the potential for deeper economic cooperation with the United States. This marks a shift from previously aggressive rhetoric, hinting at a willingness to engage in more meaningful dialogue.
The business sector reacted cautiously. With tariffs still elevated at 30%, many retailers and manufacturers remain hesitant to resume full-scale operations. Port officials and retail executives, such as Gene Seroka of the Port of Los Angeles and Mike Abt of Abt Electronics, indicated that businesses are adopting a wait-and-see approach amid persistent uncertainty.
The 90-day pause in tariffs could influence the political landscape as the US gears up for the 2024 presidential election. Trump’s aggressive trade tactics have appealed to manufacturing-heavy states but have also triggered concerns among small businesses and consumers facing higher prices.
Policy analysts described the agreement as a tactical retreat by the US rather than a concession by China. Critics argue that American consumers bear the brunt of the tariffs, as prices for electronics and everyday goods continue to climb.
As part of the agreement, China also pledged to remove export restrictions imposed after April 2, including those on rare earth elements critical to high-tech industries. While further talks are anticipated, no formal schedule has been announced.
Despite the temporary nature of the truce, legacy tariffs—including 100% duties on electric vehicles and 50% tariffs on solar products—remain in effect, continuing to impact the flow of goods between the two nations.
In the weeks ahead, investors, businesses, and policymakers will be closely watching developments to determine whether this ceasefire leads to a more lasting resolution or simply delays the next phase of economic confrontation.
