Global markets respond positively as US, China slash tariffs in surprise 90-day truce

The United States and China have agreed to significantly reduce tariffs on each other’s goods for a 90-day period, marking a major breakthrough in efforts to ease trade tensions that have rattled global markets.

The surprise announcement followed marathon negotiations over the weekend in Geneva, Switzerland, and was confirmed in a joint statement issued Monday. Both sides hailed the talks as having made “substantial progress.”

CNN reports the two countries acknowledged the importance of a “sustainable, long-term, and mutually beneficial economic and trade relationship.”

Global markets responded positively to the news. Dow futures jumped over 2 percent, S&P 500 futures rose nearly 3 percent, and Nasdaq Composite futures surged more than 3.5 percent during Asian afternoon trading. Hong Kong’s Hang Seng index closed roughly 3 percent higher.

The US dollar strengthened, while gold prices fell — a sign of improved investor confidence.

The agreement, set to take effect by May 14, includes a mutual reduction of tariffs by 115 percentage points for 90 days. This will see US tariffs on Chinese goods drop from 145 percent to 30 percent, while China will cut its tariffs on American imports from 125 percent to 10 percent.

However, the US will maintain its 20 percent fentanyl-related tariffs on Chinese goods imposed earlier this year.

China has also agreed to suspend or cancel non-tariff retaliatory measures imposed since April 2. These include export restrictions on rare-earth minerals, blacklisting of American firms, and a monopoly probe into US chemical giant DuPont.

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