US-China Tariff Truce Sparks Global Market Rally

On Monday, the United States and China reached an agreement to reduce most of the tariffs that have fueled their trade conflict, opting for a 90-day truce to facilitate further negotiations. The decision brought a sharp rise in stock markets worldwide, as investors reacted positively to the potential de-escalation of tensions between the world's two largest economies. US Trade Representative Jamieson Greer announced that the US would cut its 145% tariff rate on Chinese goods by 115 percentage points, reducing it to 30%, while China promised a similar reduction on US goods to 10%.

The announcement was made during a press conference in Geneva by Greer and Treasury Secretary Scott Bessent. The officials emphasized ongoing consultations aimed at addressing trade issues amicably. Bessent expressed that the exorbitant tariff rates could have led to a near complete shutdown of trade between the two nations, an outcome neither desires. "Neither side wants a decoupling," he said. This move was viewed as a strategic retreat from the brink of a trade embargo.

Share markets responded favorably to the news, with US futures increasing by more than 2% and significant gains across Hong Kong, Germany, and France. The Trump administration has escalated tariffs globally, but its focus on China has been particularly intense. Initial US tariffs included a 20% charge linked to efforts to curb fentanyl imports from China, while the rest stemmed from longstanding trade disputes. With the potential easing of these tariffs, hopes are high for a more balanced trade relationship going forward.

(With inputs from agencies.)