On May 12, 2025, the United States and China announced a major milestone, revealing a temporary reduction in tariffs for 90 days. This important announcement quickly boosted global markets, driving them higher in reaction to the news. The decision represents a notable reduction in the trade tensions. These tensions have characterized the relationship between these two economic giants. During this 90-day period, tariffs on Chinese goods entering the United States will be significantly reduced. They will drop from 145 percent to a more manageable 30 percent. In a reciprocal move, China will lower tariffs on U.S. imports. The tariffs will drop from 125 percent to a much lower rate of 10 percent. This joint effort aims to reduce economic pressures. It also creates a better environment for international trade and cooperation.
Following the announcement, stock futures surged significantly. Notable gains were seen in the Dow Jones Industrial Average, Nasdaq Composite, and S&P 500 indices. At the same time, oil prices rose, and the U.S. dollar, known as the greenback, also gained strength against other currencies. In contrast, gold prices saw a pullback. This is significant because the precious metal is trading near record highs. This decline in gold prices indicates a change in investor sentiment. Investors seem to be moving away from safe-haven assets. These assets usually attract capital during uncertain times. Overall, these developments represent a significant step toward stabilizing the global economy, which has been subjected to considerable turbulence and uncertainty in recent times. The interplay of these market movements underscores the complex dynamics at play in the current financial landscape.
Upbeat Outlook
File Photo of US President Donald Trump with Chinese President Xi Jinping. The two countries have finalised a trade deal and a tariff cut is likely round the corner. (Photo: AP)
The main beneficiaries of this tariff negotiation are clearly the companies in industries that depend on China-U.S. trade. This includes both importers and exporters. These entities stand to gain significantly from the alleviation of trade barriers. Additionally, other sectors expected to benefit from this agreement include manufacturing, technology, and agriculture. These sectors are essential to the overall economy. Furthermore, consumers will feel significant relief from this agreement. It is expected to lower prices on many goods that were previously impacted by the tariff increases. This multifaceted approach not only supports businesses but also enhances consumer welfare.
The easing of tariffs is also expected to relieve disruptions in global supply chains, allowing operations teams to plan more smoothly for at least 90 days, while negotiations and structural reforms resume.
Ronald Francois
Ronald is a senior market strategist at Sigmanomics.com, bringing over a decade of hands-on experience in equity markets and three years of specialized expertise in options trading. Known for his sharp fundamental analysis and deep understanding of macroeconomic trends, Ronald provides readers with actionable insights that bridge the gap between institutional strategy and individual investor needs.
