Sign in Subscribe
Tariffs

US and China Agree to 90-Day Trade War Truce, Markets Surge

Strategic Insights

— 2 min read

A temporary peace has been brokered between the United States and China, with the two countries agreeing to a 90-day pause on the most severe tariffs imposed on each other in recent months. The deal, reached after talks in Geneva, is expected to ease tensions and reduce the risk of a global economic downturn. However, analysts warn that the truce could be fragile and that the agreement may not necessarily benefit the global economy in the long run.

Key Takeaways:

  • The US and China have agreed to a 90-day pause on tariffs, with the US reducing its tariffs on Chinese goods to 30% from 145%, and China lowering its levies on US products to 10% from 125%.
  • The deal is expected to boost global stock markets, with the S&P 500 rising 3.26% and the Nasdaq Composite jumping 4.35%.
  • Economists warn that the deal may not be enough to prevent a US recession, and that consumer prices may continue to rise due to Mr. Trump's protectionist agenda.
  • The agreement is seen as a significant step towards de-escalating the trade war, but analysts caution that it could easily collapse.
  • US President Donald Trump hailed the deal as a "total reset with China," and said he is confident that Beijing will also reduce non-tariff trade barriers.
  • The deal may benefit Canada indirectly, with expert Douglas Porter stating that "anything that's better for the global economy will be better for Canada."
  • Despite the positive news, Canadian households and businesses remain nervous, which could weigh on spending and investment.

Statistics:

  • The S&P 500 rose 3.26% in response to the news.
  • The Nasdaq Composite jumped 4.35% in the same time period.
  • US tariffs on Chinese goods have been reduced to 30% from 145%.
  • Chinese levies on US products have been lowered to 10% from 125%.
  • The deal is set to last for 90 days, after which the US will reassess its tariffs on China.
  • US-China trade between 2019: $593.7 billion (Peterson Institute for International Economics).
  • Canada's trade with the US in 2019: $617.6 billion (Statistics Canada).

Sources:

  • Peterson Institute for International Economics
  • Mark Rendell, "US, China Agree to 90-Day Trade War Truce, Markets Surge" ( source article)
  • Douglas Porter, Chief Economist, Bank of Montreal
  • Matthew Martin, Senior U.S. Economist, Oxford Economics
  • Gary Hufbauer, Senior Fellow, Peterson Institute for International Economics
  • James Griffiths and Adrian Morrow, reports from The Globe and Mail.

Read more