Markets Surge as US and China Slash Tariffs in Surprise Deal

In a move that sent global markets soaring, the United States and China agreed to a major rollback of tariffs for an initial 90 days, offering the first real de-escalation in a trade war that has shaken economies across the globe. 

Under the terms announced after a weekend of negotiations in Geneva, the US will lower tariffs on Chinese goods from 145% to 30%, while China will slash its tariffs on American products from 125% to 10%. The changes take effect by May 14, though US levies tied to fentanyl-related imports remain intact.

Investor sentiment instantly turned positive. Dow futures jumped over 2%, S&P 500 futures gained nearly 3%, and Nasdaq futures rallied more than 3.5%. Hong Kong’s Hang Seng index closed up roughly 3%, while the US dollar strengthened across major currencies and gold prices dipped as risk appetite returned.

The teetering economic backdrop meant that a deal had to be done. US GDP registered its first quarterly contraction since early 2022, while China's exports to the US dropped sharply, dragging factory activity to its lowest level in 16 months. 

As part of the agreement, China will suspend non-tariff countermeasures such as rare-earth mineral restrictions and regulatory probes into American firms.

What Does This Mean for Me?

Both sides agreed to create a permanent channel for trade dialogue, led by senior US and Chinese officials, signaling hopes for a more durable thaw. 

While this deal marks a major step forward, analysts caution that further negotiations will be needed to cement lasting change. For now, markets are treating the breakthrough as the best outcome possible.