The US-China trade war appears to be easing, with both countries agreeing to significantly reduce tariffs on each other's goods. Here's a breakdown of the recent developments ¹ ²:
- *Tariff Reductions*: The US will drop Chinese import taxes to 30% from 145%, while China will lower its tariffs on US imports to 10% from 125%. This 90-day reprieve aims to calm the trade tensions between the two nations.
- *Trade Talks*: The agreement comes after high-level discussions in Geneva, where US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer emphasized the progress made toward resolving the prolonged trade war.
- *Market Reaction*: The news has boosted US equities, with the S&P 500 rising and the dollar strengthening against safe-haven currencies. Investors are hopeful that this move will avert a global recession.
- *Impact on Emerging Markets*: The trade war's easing may also benefit emerging markets, which have been affected by the tariffs and uncertainty surrounding the global trade landscape. A weaker dollar could ease some risks for these markets.
While the agreement is seen as a positive step, some investors remain cautious, noting that the toughest negotiations are yet to come. The US-China trade relationship remains complex, and further developments will be closely watched by markets and investors.