The United States and China have agreed to temporarily lower tariffs on each other’s goods for 90 days while trade negotiations continue. This significant step back in the trade war has caused stocks to rally sharply higher on Monday. The S&P 500 gained 3.3 percent, its best day since April 9, when a rally was spurred by President Trump pausing his “reciprocal” tariffs on all countries except China.
The tech-heavy Nasdaq climbed even higher, rising more than 4 percent. The apparent thaw in relations between the United States and China, even if temporary, was the latest concession offered by the Trump administration. Last month, the administration had sent stocks tumbling after announcing unexpectedly high tariffs on dozens of countries.
The S&P 500 had dropped steeply after Mr. Trump announced sweeping tariffs in early April, but it has since rebounded, recovering all of those losses as various exemptions and pauses to tariffs were announced. In a joint statement released on Monday after weekend talks in Geneva, the United States and China said they had reached an agreement to reduce their respective tariffs for 90 days while trade negotiations continue.
This de-escalation in the trade war between the world’s two largest economies has provided a much-needed reprieve for investors and businesses alike. They have been grappling with the uncertainty and potential global economic impact of the ongoing tariff battles. The truce, which was announced after intensive negotiations, is being hailed as a national triumph in China.
It marks a significant turn in the relations between the two economic superpowers.
90-day tariff truce impact
According to President Donald Trump, the 90-day cessation of hostilities in the trade war is a win for his administration.
He cites it as validation of his aggressive trade policies. However, the sentiment within China starkly contrasts with Trump’s declaration. Many Chinese see this development as evidence of America’s vulnerability.
They suggest that the U.S. was forced to concede due to volatile markets and public dissatisfaction. China argues that the truce has not only resulted in key concessions from the United States but has also demonstrated America’s limited tolerance for economic pain. This perceived weakness has been celebrated in China, bolstering national pride and the government’s image domestically.
The implications of this trade truce are multifaceted. While it brings temporary relief to the escalating tariffs and market instability, it also leaves unresolved issues that may resurface in future negotiations. For China, the temporary halt in trade tensions provides an opportunity to regroup and strengthen its economic strategy against future confrontations.
The announcement came as President Xi Jinping continues to solidify his international standing, navigating complex relationships with global leaders, including Russia’s President Vladimir Putin. Despite the public display of solidarity, there are underlying tensions, highlighting the intricacies of global alliances in the current geopolitical climate. As China revels in its perceived victory, the broader implications for international trade, economic policies, and bilateral relations between these two powerful nations remain to be fully understood.
The world watches closely as America and China’s trade negotiations unfold, influencing global markets and international relations.
