Global Economic Giants Finally Breathe a Sigh of Relief!
The United States and China reached a significant trade agreement on Monday, announcing a “temporary suspension” of most tariffs on each other’s goods, symbolizing a marked easing of the tense trade relations that have characterized recent years. This move immediately injected confidence into global markets, with U.S. stock futures rising across the board and the dollar index strengthening alongside European stock markets.
Tariffs “Cooling Down”: Bilateral Rates Slashed from 125% to 10%
According to the agreement, both the U.S. and China have agreed to significantly reduce “reciprocal” tariffs from a high of 125% down to just 10%. However, the U.S. will maintain an additional 20% tariff on Chinese imports related to fentanyl, meaning the overall tariff level on Chinese goods will be approximately 30%. U.S. Treasury Secretary Scott Bessent stated at a press conference, “We have reached a 90-day suspension agreement and substantially reduced tariffs. The reciprocal tariffs will be lowered by 115%.”
Key Negotiation Location: Geneva, Switzerland Adds a “Peaceful Atmosphere” to the Talks
This groundbreaking agreement was finalized during high-level negotiations held by Lake Geneva in Switzerland. Bessent pointed out that the choice of location helped facilitate a positive and balanced dialogue outcome, saying, “I believe that selecting Geneva as the location brought tremendous calm and balance to this highly constructive process.” Both sides also indicated that they would continue dialogues on economic and trade policies in the future, suggesting a gradual warming of bilateral relations.
Stocks and Currencies Rise: Market Quickly Reacts Positively
Investors reacted enthusiastically to the “tariff truce,” with U.S. stock futures soaring:
- Nasdaq futures surged 3.6%
- S&P 500 futures rose 2.8%
- Dow Jones Industrial Average futures skyrocketed nearly 1,000 points, an increase of 2.3%
Additionally, the ICE Dollar Index, which measures the dollar against a basket of global currencies, jumped 1.3% to 101.63, indicating a resurgence of investor confidence. In Europe, the pan-European Stoxx 600 index also rose 0.7% in early trading, reflecting the positive response of global capital markets to the easing of the U.S.-China trade situation.
Temporary Ceasefire or the Starting Point for Long-Term Easing?
Although this agreement is merely a “temporary truce” lasting 90 days, it is sufficient to bring hope to the long-standing tensions in the U.S.-China trade war. Investors and the business community will continue to monitor whether both sides can reach a longer-term, structural new trade agreement within the next three months. In the context of global geopolitical shifts and supply chain restructuring, the direction of U.S.-China trade dialogues will undoubtedly influence market dynamics and corporate decision-making rhythms.
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