Markets around the globe surged on Monday after the United States and China agreed to temporarily suspend most of their retaliatory tariffs, offering a 90-day reprieve in an escalating trade standoff. The détente—reached after high-stakes talks in Geneva—marked a significant cooling of tensions between the world’s two largest economies, and sparked investor optimism across major indices.
The breakthrough came after U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer met with Chinese Vice Premier He Lifeng and international trade envoy Li Chenggang. In a joint statement, both sides confirmed that reciprocal tariffs would be slashed—from over 125% to just 10%—for a 90-day window to allow further negotiation. The U.S. will maintain a 20% levy on Chinese imports related to fentanyl, making its total tariff exposure 30%.
Markets responded enthusiastically. U.S. futures spiked, with the Nasdaq, S&P 500, and Dow showing strong upward momentum. Asian markets led the rally—Hong Kong and Mumbai both soared over 3%, while the Shanghai Composite, Tokyo, and Seoul all posted healthy gains. In Europe, London, Paris, and Frankfurt each rose more than 1%, with oil prices and the U.S. dollar also posting strong rallies. Even gold, a traditional safe haven, saw extended losses as risk appetite returned.
But while the tone of the talks was described as “candid, in-depth, and constructive,” analysts remain cautious. As Karsten Junius of Bank J. Safra Sarasin observed, “Markets may have priced out negative surprises too quickly. Volatility is likely to persist until a comprehensive resolution is reached.”
This truce follows months of tit-for-tat tariff escalations that began with President Trump’s initial levies on April 2. By mid-year, the U.S. had ramped duties on Chinese imports to 145%, triggering retaliatory rates from Beijing of up to 125%. The economic fallout rattled global markets and amplified fears of a prolonged recession.
The Geneva talks, held in a neutral setting, seem to have served as a catalyst for progress. “The venue added equanimity to the process,” Bessent said, hinting at a strategic shift in tone. Analysts suggest that the magnitude of the tariff reductions indicates an acknowledgment by both nations of the mutual harm prolonged tensions could inflict on global growth.
While the 90-day pause offers breathing room, it also serves as a countdown. The coming weeks will be critical in determining whether the world’s top two economies can translate this initial goodwill into a durable framework for trade cooperation. Key issues—such as technology transfer, rare earth export restrictions, and enforcement mechanisms—remain unresolved.
As oil prices climb, currency markets fluctuate, and gold slips from recent highs, the global economy remains on alert. Investors and policymakers alike are watching closely—not just for signs of progress, but for potential pitfalls that could reignite tensions.
For now, the markets are exhaling. But the real test lies ahead
