#TradeWarEases The U.S.-China trade war has experienced a significant de-escalation following a landmark 90-day tariff reduction agreement reached on May 12, 2025. This development has notably impacted global financial markets, with major U.S. indices experiencing substantial gains.

Key Details of the Agreement:

Tariff Reductions: The U.S. has agreed to lower tariffs on Chinese goods from 145% to 30%, while China has reduced tariffs on U.S. products from 125% to 10%.

Exclusions: Certain sector-specific tariffs, including a 20% tariff related to fentanyl imports from China, remain unaffected by this agreement.

Diplomatic Engagement: The agreement was finalized during high-level talks in Geneva between U.S. Treasury Secretary Scott Bessent and Chinese Vice-Premier He Lifeng.

Market Reactions:

Stock Market Surge: The Dow Jones Industrial Average surged by 1,160 points (2.8%), the S&P 500 rose by 3.3%, and the Nasdaq gained 4.4%—marking their largest single-day increases since April 9.

Sector Performance: Technology and retail sectors saw significant gains, with companies like Apple, Amazon, Dell, and Best Buy leading the rally.

Global Impact: European and Asian stock markets also responded positively, and commodities such as Brent crude oil experienced price increases.

Economic Implications:

Consumer Relief: The tariff reductions are expected to alleviate cost pressures on consumers, particularly benefiting back-to-school and holiday shopping seasons.

Ongoing Concerns: Despite the positive developments, economists caution that elevated base tariffs may continue to affect economic data, and the underlying trade tensions have not been fully resolved.