Markets Soar After US-China Tariff Cuts

The US and China agreed to reduce their tariffs during Switzerland talks which led to a market surge on Monday and reduced trade war concerns. The United States reduced its tariffs on Chinese imports from 145% to 30% while China lowered its tariffs on US imports from 125% to 10%. President Trump declared the agreement as a “total reset” while stating that peak tariffs would never return. The Dow Jones and S&P 500 indexes increased by more than 2.5% and the Nasdaq reached a 3.3% rise which exceeded the levels from Trump’s April 2 “Liberation Day” tariff announcement. The market reaction to the reduced tensions resulted in a 2% increase in crude oil prices and a stronger US dollar. The Federal Reserve rate cut expectations decreased which led to an increase in Treasury yields while gold prices declined. Trump implemented his initial tariffs against 60 trading partners with China bearing the brunt of the impact which led Beijing to retaliate. The economic pressure on China’s factories caused Trump to observe their situation. The agreement to suspend certain tariffs for 90 days supports worldwide supply networks but creates ongoing uncertainties. Trump plans to speak with President Xi Jinping while maintaining optimistic expectations about future negotiations.