US, China Agree to 90 Day Reduction in Tariffs

The stock markets are soaring.

U.S., China agree to 90-day tariff reduction after negotiations

The United States and China have agreed to reduce tariffs for 90 days following trade negotiations in Geneva, offering temporary relief to global markets. The deal marks a pause in the escalating economic conflict, with both countries pledging to resume talks during the truce.

Key Details:

The U.S. will lower tariffs on Chinese imports from April levels by 24 percentage points, maintaining a 10% base rate.

China will implement a matching reduction and suspend additional non-tariff measures targeting American goods.

S&P 500 futures jumped 3%, while U.S. bond yields climbed as investors reacted to signs of de-escalation.

Diving Deeper:

After weeks of mounting economic tension, the United States and China on Monday jointly announced a 90-day reduction in tariffs, signaling a temporary easing of the trade war that has unnerved businesses, investors, and policymakers across the globe.

The agreement, reached during weekend negotiations in Geneva, was confirmed by U.S. Treasury Secretary Scott Bessent. "We had very robust discussions. Both sides showed great respect to what was a very positive process," Bessent said in remarks to reporters. According to Bessent, the U.S. will lower its tariffs to 30%, while China will cut its rates to 10% during this period--a proportional rollback from their respective April highs.

The White House clarified that the reduction affects tariffs announced by President Trump on April 2, cutting them by 24 percentage points while keeping the base ad valorem rate of 10%. In response, Beijing agreed not only to match the tariff rollback but also to lift administrative barriers and non-tariff measures it had imposed since April.

Both countries are expected to implement the agreed measures by Wednesday. The joint statement released following the talks indicated that discussions will continue over the coming months as the two sides explore a longer-term resolution.

Markets reacted quickly and positively. S&P 500 futures surged over 3% on the news, providing a shot of optimism after weeks of uncertainty. The U.S. Dollar Index, which had been under pressure due to investor anxiety about America's trade posture, rose more than 1%. Meanwhile, bond markets adjusted sharply, with the yield on the 10-year Treasury climbing to 4.445%, its highest point since early April.

The Dow is now up over 1000 points.

The Dow Jones Industrial Average surged 1037 points, or 2.5%, staying near its highs for most of the session with buying enthusiasm remaining strong. The S&P 500 popped nearly 3% on Monday, bringing its gain since its April intraday low at the height of tariff pessimism to more than 20%. The benchmark has cut its year-to-date losses to just 0.9%.

The Nasdaq Composite boomed by 4%, as the initial China agreement sent technology stocks tied to the country -- like Tesla and Apple -- flying higher.

posted by Ace at 01:19 PM

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