US and China Agree to Ceasefire in Trade War

The US and China have reached an agreement on a 90-day ceasefire in their trade war, slashing tariffs on each other's goods and injecting hope into global markets. The deal, announced after talks in Geneva, marks a significant detente in the confrontation that had threatened to fuel inflation, empty supermarket shelves, and stoke unemployment in both countries. The agreement comes as a relief to investors, with stocks soaring and the dollar rising 1.4 percent against a basket of currencies. The move is seen as a step towards reducing the uncertainty that had gripped global markets, with analysts predicting a growth hit this year but avoiding a recession.

Key Takeaways:

• The US and China have agreed to slash tariffs on each other's goods for at least the next 90 days, with the US reducing its tariffs from 145 percent to 30 percent and China reducing its retaliatory tariffs from 125 percent to 10 percent.
• The two countries will also "suspend or cancel" non-tariff measures against each other, marking a significant easing of tensions.
• The agreement was reached by delegations headed by US Treasury Secretary Scott Bessent and Chinese Vice-Premier He Lifeng, and is seen as a step towards reducing the uncertainty that had gripped global markets.
• Analysts predict a growth hit this year, but avoid a recession, with one analyst stating that "peak tariffs are very much in the past" and markets defaulting to assuming a "10-30 world" where tariffs are 10 percent on most goods and 30 percent on Chinese imports.
• The S&P 500 rose 3 percent by early afternoon, with the tech-heavy Nasdaq climbing 4 percent, as companies such as Apple and Nvidia rallied strongly.
• The dollar jumped 1.4 percent against a basket of currencies, as traders bet that the US Federal Reserve would cut interest rates more slowly than previously thought.

Statistics:

• S&P 500 rose 3 percent by early afternoon.
• Nasdaq climbed 4 percent.
• Dollar jumped 1.4 percent against a basket of currencies.
• Tariffs on Chinese imports to be reduced from 145 percent to 30 percent.
• Retaliatory tariffs on US imports to be reduced from 125 percent to 10 percent.
• 90-day ceasefire agreed upon.

Sources:

• Bloomberg: "US, China Agree to 90-Day Ceasefire in Trade War"
• Reuters: "US and China agree to 90-day ceasefire in trade war"
• CNBC: "Stocks soar as US and China agree to 90-day ceasefire in trade war"
• The Wall Street Journal: "US and China Agree to 90-Day Trade War Ceasefire"