The China-U.S. negotiations unexpectedly went smoothly. Is a bull market coming?
Latest news: Breakthroughs have been made in the tariff negotiations between China and the U.S. in Geneva, with both sides indicating that the discussions went well. A joint statement will be released tonight. This is the first face-to-face discussion regarding tariffs between the two countries since the Trump era, and the results were smoother than expected.
Core content of the negotiations:
China's bottom line:
The U.S. must cancel all imposed tariffs and will not accept exchanges involving issues like fentanyl.
There will be no concessions on rare earth and critical mineral export policies.
Industrial subsidies and technological autonomy must be preserved.
Trade disputes must be resolved within the WTO framework, and unilateral sanctions from the U.S. will not be accepted.
The exchange rate of the yuan and financial openness must be controlled by China itself.
U.S. conditions:
Initially stated it would be reduced to 80%, but later reports suggest it might drop to 34%.
Demanded that China reduce the trade deficit and cooperate in resolving the fentanyl issue.
Attempted to pressure China into concessions with high tariffs but refused to lower tariffs beforehand.
Negotiation process:
Day 1 (May 10): Discussed for over 10 hours with a tense atmosphere, as neither side wanted to appear to compromise first.
Day 2 (May 11): Trump hinted that tariffs might be reduced to 80%, and while China did not respond immediately, the atmosphere of negotiations eased.
Final outcome (May 12): Both sides announced “substantial progress,” agreed to establish a long-term negotiation mechanism, and China committed to reducing the trade deficit while issuing a joint statement.
Market impact:
Although a specific agreement has not yet been announced, U.S. Treasury Secretary Yellen stated that the negotiations were “very fruitful,” and more details may follow. Some analysts believe U.S. tariffs could drop to 50% or even lower.
Conclusion:
Reaching an agreement is definitely better than continuing to remain at an impasse, which is very positive for the market! If tariffs are significantly reduced, global trade and financial markets will breathe a sigh of relief, and the foundation for a bull market is being established. However, specifics still depend on future details; don’t celebrate too early but also don’t be too pessimistic—at least the direction is good!
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