US Treasury Secretary Scott Bessent has just announced that the US and China have reached an agreement on a “90-day pause” and to “substantially move down” their reciprocal tariffs.
Both sides will reduce tariffs by 115%. As it stands, China’s tariffs on US imports reach 125%, while the US’ charge on Chinese goods is 145%.
As such, rates will fall to 10% and 30% respectively.
The decision comes after Bessent and Chinese vice-premier He Lifeng held talks in Geneva.
Since the announcement, the Chinese yuan has risen to its strongest level in six months: onshore yuan has reached 7.2 per dollar, while offshore yuan jumped 0.4%. The US dollar has also rallied 0.7%.
Meanwhile, the price of gold, which is often considered a ‘safe-haven’ investment, dropped by 2.3%.
US stock index futures have also strengthened as a result. S&P 500 futures are up 2.8%, Nasdaq 100 are up 3.6%, and Dow futures are up 2.3%.
US President Donald Trump’s decisions have sent shockwaves through international markets and exacerbated domestic inflationary pressures. The US has, over decades, grown embedded in trade networks; Trump’s announcements have been both politically polarising and financially disruptive.
The immediate market responses highlight that this decision is a welcome indication that the heated trade war which has been waging may show signs of de-escalation.
Trump posted on his Truth Social platform on Sunday that, “We want to see, for the good of both China and the U.S., an opening up of China to American business,” adding: “GREAT PROGRESS MADE!!!”
