Published by Global Banking & Finance Review®
Posted on May 12, 2025
4 min readLast updated: January 23, 2026
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The US and China agreed to a 90-day tariff pause, boosting stocks and the dollar, and easing trade war fears.
LONDON/SHANGHAI (Reuters) - Stocks and the dollar rallied on Monday after the United States and China said they had agreed on a 90-day pause on tariffs and reciprocal duties would drop sharply, giving investors some confidence that a full-scale trade war may have been averted.
U.S. Treasury Secretary Scott Bessent, speaking after talks with Chinese officials in Geneva, told reporters the two sides had reached the deal that was outlined in a joint statement and that reciprocal rates would drop by 115 percentage points.
This weekend's Geneva meetings were the first face-to-face interactions between senior U.S. and Chinese economic officials since U.S. President Donald Trump returned to power and launched a global tariff blitz, imposing particularly hefty duties on China.
MARKET REACTION:
STOCKS: Futures on the S&P 500 and Nasdaq jumped to trade up 2.8% and 3.6%, respectively, from gains of 1.5-2% previously, while in Europe, the STOXX 600 rose 1% in early trading.
FOREX: The dollar extended gains, with the euro down 0.8% at $1.1164, having traded down 0.2% on the day earlier, while the yen weakened, leaving the U.S. currency up 1.1% at 146.945, from a 0.5% gain earlier.
BONDS: Benchmark 10-year U.S. Treasury yields edged up 6 basis points on the day to 4.435%, having traded up 5 bps before the joint statement.
COMMENTS:
KENNETH BROUX, SENIOR STRATEGIST FX AND RATES, SOCIETE GENERALE, LONDON
"There is a de-escalation between China and US resulting in a reduction of tariff on Chinese goods to 30% and Chinese tariffs on US goods to 10%. It's a clear vote by the market in favour of riskier assets. It's a step in the right direction and a positive of U.S. assets and U.S. economy."
"The dollar was lagging other markets in the recovery from the April lows. We had equities up back to April 2nd levels, we had bond yields up to those levels and the dollar was actually lagging that move. Now the conditions are falling into place for a deeper adjustment and a bigger recovery of the dollar to catch up with equities and bond yields."
ZHIWEI ZHANG, CHIEF ECONOMIST, PINPOINT ASSET MANAGEMENT, HONG KONG
"This is better than I expected. I thought tariffs would be cut to somewhere around 50% and this is much lower. Obviously, this is very positive news for economies in both countries and for the global economy, and makes investors much less concerned about the damage to global supply chains in the short term.
But we also need to keep in mind this is only a three-month temporary reduction of tariffs. So this is the beginning of a long process. The two sides will spend months probably, to come up with a resolution, or reach a final trade deal, but this is a very good starting point."
ARNE PETIMEZAS, DIRECTOR RESEARCH, AFS GROUP, AMSTERDAM
"Such a sharp U-turn by the US on tariffs on a Monday morning is quite the surprise. It seems that tariffs on China will fall to manageable levels, albeit temporary. Markets should rally on this. How can Trump credibly raise tariffs when the 90-day pause ends? He has toned down his tariffs faster than anyone thought he could, and April 2 will soon be forgotten. Granted, he told you to buy the dip."
WILLIAM XIN,CHAIRMAN OF HEDGE FUND SPRING MOUNTAIN PU JIANG INVESTMENT MANAGEMENT, SHANGHAI
"The result far exceeds market expectations. Previously, the hope was just that the two sides can sit down to talk, and the market had been very fragile. Now, there's more certainty. Both China stocks and the yuan will be in an upswing for a while."
(Reporting by Reuters Markets Breaking News team; Compiled by Amanda Cooper; Editing by Vidya Ranganathan)
The main topic is the US-China agreement to pause tariffs for 90 days, which has positively impacted global markets.
Stocks and the dollar rallied, with significant gains in the S&P 500, Nasdaq, and European markets.
The pause reduces tariffs on Chinese and US goods, easing trade tensions and benefiting the global economy.
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