US Dollar, Stock Markets Rally After US-China 10% Tariff Truce
- Global financial markets rallied on Monday after the United States and China agreed to a surprise 90-day tariff truce aimed at easing trade tensions
- The U.S. and China both agreed to reduce import duties from over 100% to 10%
- Wall Street responded positively to the agreement, with the S&P 500 surging 3.3% and the Nasdaq climbing 4.4%, marking the largest single-day gains in over a year
- Oil prices rose nearly 2%, and the euro weakened by 1.4%, as markets priced in a reduced risk of recession and improved trade flow expectations between the world’s two largest economies
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Elijah Ntongai, a journalist at TUKO.co.ke, has over four years of financial, business, and technology research and reporting experience, providing insights into Kenyan and global trends.
Global financial markets surged Monday following a surprise 90-day tariff truce between the United States and China.
Source: Getty Images
Following the joint statement, Wall Street posted its biggest single-day gains in over a year, and the U.S. dollar strengthened sharply against major currencies.
US-China tariff truce
The breakthrough deal, reached during tense trade talks in Geneva, saw both sides slash steep import duties in a bid to de-escalate growing economic tensions.
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The U.S. agreed to reduce tariffs on Chinese goods from 145% to 10%, while China cut its duties on American imports from 125% to just 10%.
The market reaction was swift and bullish. The S&P 500 jumped 3.3%, while the tech-heavy Nasdaq soared 4.4% as investor sentiment rebounded from last month’s slump triggered by the tariffs.
The U.S. dollar rose 2% against the Japanese yen, while traditional safe-haven assets like gold and the Swiss franc saw steep declines as risk appetite returned for the US dollar.
In currency markets, the euro weakened by 1.4%, while oil prices gained nearly 2% as traders priced in reduced recession risk and potential increases in demand tied to improved trade flows between the US and China.
Whether this truce becomes the foundation of a new trade framework or simply a short-lived market sugar high will depend largely on the next steps taken by President Donald Trump and Chinese President Xi Jinping.
Will the tariff truce last?
To prevent renewed tensions, Washington and Beijing will establish a formal discussion mechanism led by China’s Vice Premier He Lifeng, with U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer representing the United States.
"After taking the aforementioned actions, the Parties will establish a mechanism to continue discussions about economic and trade relations. The representative from the Chinese side for these discussions will be He Lifeng, Vice Premier of the State Council, and the representatives from the U.S. side will be Scott Bessent, Secretary of the Treasury, and Jamieson Greer, United States Trade Representative," read the joint statement released by the two countries.
As reported earlier on TUKO.co.ke, the agreement to cut tariff rates to 10% for the next 90 days will take effect as from May 14, 2025.
Proofreading by Asher Omondi, copy editor at TUKO.co.ke.
Source: TUKO.co.ke
