Following a trade war between the world’s two largest markets that had sparked fears of a global crisis, the US and China agreed to slash steep tariffs for at least 90 days, putting a brake on the international stock markets, which rose on May 12th.
The momentary delay, in contrast, did much to address the underlying contradictions that led to the conflict, including US President Donald Trump’s desire for more action from Beijing to fight the US fentanyl crisis. These include the US trade deficit with China and US President Donald Trump’s desire for more action from Beijing.
While business owners were enthralled by the action, investors were seeking more precision.
According to the two sides, the US will reduce the additional tariffs it imposed on Chinese goods next month from 145 per cent to 30 per cent over the next three months under the momentary peace, while Chinese tasks on US imports will decrease to 10 per cent from 125 per share.
In an interview with Fox News, US trade representative Jamieson Greer stated that in addition to the tariff reductions, China agreed to lift export controls placed after April 2, including those imposed on rare earth minerals and magnets used extensively in high-tech manufacturing.
In a conflict that had disrupted supply chains and caused layoffs, which had brought nearly US$ 600 billion in two-way trade to a standstill, the financial markets rejoiced.
Wall Street stocks rose significantly as the S&, P 500 closed at its highest level since March 3 and the tech-heavy Nasdaq Composite reached its highest close since February 28.
As the news eased- but did not overturn- concerns that Trump’s trade war may crater the global economy, the dollar increased while safe-haven gold prices decreased.
On Tuesday, Singapore’s Straits Times Index (STI ) increased by more than 1 %. Due to Vesak Day, which is a public holiday, it was closed on Monday.
The benchmark index was up 1.53 % as of 9:30 am.
After the US signed preliminary pacts with Britain and now China, Trump and his allies praised the agreement as proof that his aggressive tariff strategy was working.
Trump stated at the White House,” They’ve agreed to open China, fully open China, and I think it’s going to be fantastic for China, I think it’s going to be fantastic for us, and I think it’s going to be great for unification and peace.”
It was unclear as of yet whether the severe trade imbalances that have decimated US manufacturing will be addressed.
Even US Treasury Secretary Scott Bessent acknowledged that a full reset of Washington’s trade relationship with Beijing will take years after hammering out a deal with Chinese counterparts on Monday during weekend talks in Geneva.
Beijing, according to China’s state media, continued to adhere to its principles while paving the way for more cooperation with the US, breaking from its resolute defiance a week earlier.
According to government-run broadcaster CCTV, “economic and trade cooperation between China and the US has a deep foundation, great potential, and broad space.”
In the election of 2024, Trump campaigned for ending unfair trade practices and increasing US manufacturing capacity. In states like Michigan and Pennsylvania, which have long lost manufacturing jobs, he won blue-collar workers ‘ votes.
Trump’s tariff policy, however, also attracted criticism from a number of organizations. While American consumers were concerned about rising costs, small businesses and truckers were prepared for significant repercussions from the China tariffs.
The administration must step back, according to Scott Kennedy, a Center for Strategic and International Studies expert on China business and economics, or the US economy could suffer significant harm.
According to Kennedy,” This is a US retreat, not a Chinese cave,” at least to the extent that it is. The US was the one who” started the trade war” and escalated it. The Chinese retaliated, and they have only ceased to use their retaliatory measures.