The United States and China have reached a temporary agreement to reduce mutual tariffs for a period of 90 days, which has helped ease the trade tensions that had been weighing on global markets in recent months. Under the terms of the agreement, the United States lowered its tariffs on Chinese imports to 30%, while China reduced its tariffs on American products to 10%. This move was seen as a positive signal from both sides, reflecting a genuine intention to contain the trade escalation and return to the negotiating table.
Financial markets responded strongly to the agreement. Futures on the S&P 500 and Nasdaq indices posted gains of over 2.8% and 3.6% respectively, while European markets also recorded noticeable gains, indicating renewed investor appetite for risk. In the currency market, the U.S. dollar made solid gains against the euro and yen, supported by improved confidence in the American economy and a rise in 10-year Treasury yields to 4.435%, enhancing the dollar’s appeal as a short-term safe haven.
Despite the current tariff reductions, overall tariff levels remain higher than they were before President Trump returned to office. Key tariffs on products such as steel, aluminum, and automobiles are still in place, limiting the full positive impact of this agreement on trade and production flows. While market sentiment has calmed somewhat, several sensitive sectors continue to face structural challenges due to these remaining tariffs.
This agreement marks a step in the right direction, but it does not guarantee an end to the trade conflict. The continuation of this temporary calm depends entirely on the commitment of both parties to engage in serious negotiations during the 90-day window. Markets remain cautious, as any breakdown or escalation could quickly reverse the recent gains—especially considering that the previous trade war froze hundreds of billions in bilateral trade and disrupted supply chains, particularly in high-tech and strategic industries. As such, the current stability remains fragile and subject to change at any moment.
