Stacy Pereira
The U.S. and China on May 12, agreed to an initial trade deal that cuts “reciprocal” tariffs that were levied on ‘Liberation Day’ from 125% to 10% for 90 days. The decision came as a big reprieve to global market participants who cheered both Trump’s openness and Beijing’s negotiating strategy.
After two days of negotiations, news of two superpowers’ trade deal turbocharged stocks globally, especially shares of technology and consumer discretionary stocks which saw huge spikes in trade. According to CNBC.com, Chinese markets opened up in the green, the CSI 300 index rose 0.16% on Tuesday morning. Hong Kong’s Hang Seng saw a slight decline while Indian indices were also trading in the red after seeing a huge rally in the previous session.
Meanwhile overnight in the U.S., the Dow Jones Industrial Average surged 1,160.72 points, or 2.81%. Buying enthusiasm was strong on the S&P 500 index too, which popped 3.26% on Monday, after seeing nearly 20% of the index gains wiped out through the tariff pessimism through April. Tech- heavy Nasdaq added 4.35% and shares of companies that rely on Chinese goods like Nvidia, Apple and Tesla saw gains of 5 to7% in trade.
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Treasury Secretary Scott Bessent said that talks with China had been “very productive” and both countries had agreed to cut tariffs temporarily. Post the agreement, U.S. tariffs on Chinese goods were brought down to 30% (includes 20% fentanyl-related levy), whereas Chinese tariffs on U.S. imports have been slashed to 10%.
Tensions between China and the U.S. hit a high point in April when President Trump raised tariffs on Chinese goods to 145%. In response, China fired back with its own 125% tariffs on American products.
