On May 12, 2025, the USA and China signed a 90-day agreement to reduce tariffs: American rates on Chinese goods fell from 145% to 30%, while Chinese rates on American goods dropped from 125% to 10%. Bank of America (BofA) analyzed the macroeconomic implications of this agreement.
Firstly, a temporary increase in global trade is expected as tariff reductions will invigorate trade between the two largest economies in the world. Secondly, financial markets, which suffered declines due to the trade war, may stabilize, boosting investor confidence. Thirdly, Southeast Asian countries like Vietnam may lose some of the export advantages gained through the redirection of Chinese supplies. Fourthly, American companies will face increased competition as Chinese goods become cheaper. Fifthly, the agreement may slow inflationary pressure in the USA, but it will not resolve the trade deficit issue.
This agreement is merely a temporary truce, and further negotiations will determine the long-term consequences. BofA notes that uncertainty remains high, and the global economy requires stability. Stay tuned for updates on #MiningUpdates
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