U.S. and China Agree to 90-Day Tariff Truce, Markets Rally

The United States and China have reached a 90-day agreement to ease escalating trade tensions, temporarily lowering tariffs and avoiding further economic fallout. In a joint statement on Monday, both nations confirmed the pause after high-level weekend negotiations aimed at preventing a deeper economic rift.

Washington has reduced President Donald Trump’s "reciprocal" tariffs on Chinese imports from 145% to 10%, though a separate 20% levy tied to China’s alleged role in fentanyl trafficking remains. In return, China will cut its tariffs on U.S. goods to 10%. Despite this de-escalation, other duties, including universal 10% tariffs and levies on steel, aluminum, and automobiles, remain in place.

U.S. Treasury Secretary Scott Bessent emphasized that “neither side wanted a decoupling,” and noted the establishment of a “good mechanism” to manage future disputes. Additional talks and working-level consultations are expected to follow, signaling potential progress toward long-term trade stabilization.

Global financial markets responded positively. U.S. stock futures surged, the dollar strengthened against major currencies, and the Chinese yuan rose. The move eases investor concerns about a prolonged trade war between the world’s two largest economies, which had raised fears of a global economic slowdown.

However, analysts caution that tariffs still remain above pre-2025 levels and market optimism could waver if upcoming economic data disappoints. Chris Beauchamp, Chief Market Analyst at IG, warned that while sentiment has improved, challenges remain.

For now, investors are encouraged by the pause in hostilities and signs of renewed diplomacy, though the road to a comprehensive U.S.-China trade resolution remains uncertain.