A 90 -day break
On Monday, shares, the dollar and oil fired after President Trump’s top negotiators detail the terms of a large-albeit temporary-in the US and China commercial dispute. The expectations were high for some kind of advance. The market reaction suggests that the mission has been fulfilled in terms of achieving an important respite, although significant trade barriers remain and there is still much to be resolved.
“The consensus of both delegations is that none of the sides wanted a break,” Treasury Secretary Scott Bessent said on Monday, who was one of the leading negotiators in the US-China conversations in Geneva over the weekend. “Now we have the mechanism in force for future conversations,” he added, noting that the agreement expires after 90 days. These conversations may occur “in the coming weeks,” Bessent told CNBC.
What is in the agreement:
- The US will reduce rates on Chinese imports to 30% instead of the current 145%.
- China will reduce US products rates to 10% instead of 125%.
- Specific rates by sector are not part of this agreement, according to Jamieson Greer, US commercial representative. Trump imposed tariffs directed to items such as semiconductors manufactured in China, medical devices and aluminum and steel imports.
- China will remove non -tariff export controls, but it has not been said to raise restrictions on reviews of critical minerals to the US.
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Beijing said he expects stable and sustainable trade relations. Both sides seem to recognize the uselessness of attacking each other with huge tariffs. The retaliation measures created “the equivalent of an embargo, and neither side wants that,” said Bessent.
Also read:
Companies have warned that tariffs could destabilize global supply chains and force them to increase prices. . Wall Street Journal.)
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This uncertainty practically paralyzed corporate investments and hiring, analysts, and placed the Fed in a limbo on interest rates while observing possible impacts on inflation and the job market.
Trump seems to be familiar with Monday’s deal. Yesterday, he praised the state of negotiations in Truth Socialcalling him “a total restrained restart in a friendly but constructive way.” But the terms are much more moderate than what he ordered only three days ago: “80% of tariffs about China seems right,” he wrote on Friday, adding that it would be “with Scott B,” an apparent reference to Bessent.
Investors considered the impasse with China as the most difficult trade obstacle to overcome. Any progress in this sense will probably feed optimism for new agreements.
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“The worst of your commercial wars and much of the paralyzing uncertainty can end in two months from now on,” Holger Schmian, chief economist at Berenberg, wrote in a research note on Monday. However, higher rates will remain, and the biggest damage would be for US companies and families, Schmian added.
Among those who were high in the pre-market are giants of technology with great exposure to China, including Nvidia, Amazon and Apple.
Other Highlights
Trump Drug Price Plan shakes pharmaceutical actions: The president announced in Truth Social which would sign an executive order on Monday seeking to reduce drug prices to paid levels by even countries.
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Air trips can be interrupted nationally: After another radar failure at Newark Liberty International Airport on Friday, transport secretary Sean Duffy said he will start discussions about flight reduction there.
Inflation will be the focus this week: The consumer price index report for April will be published on Tuesday, with economists waiting for further evidence from Trump’s trade war by rekindling inflation.
