Today, as the United States and China take this incredibly important step. In return, they will agree to mutual suspension of reciprocal tariffs for an initial 90-day period. This agreement, recently concluded in Geneva, is an important step toward reducing trade frictions between the two countries.
Provided the deal holds, the U.S. will suspend its existing 145% tariff on Chinese imports to 30%. In return, China will stop enforcing its own 125% tax on U.S. products, bringing it down to 10%. Risk appetite from investors remains strong across financial markets. They are betting on a rebound in U.S. tech stocks after this news of mutual concession breaks.
The temporary suspension of these tariffs is expected to provide a much-needed relief for companies heavily reliant on international supply chains. Sentiment among investors was infectious as U.S. tech stocks looked poised to open the day on a high note. And the broader stock markets had a major break-out day of their own, thanks mostly to this completely unanticipated twist of events.
The recent tariff cuts offer some welcome news. The agreement doesn’t address the core issue of the U.S. government’s choice to remove the “de minimis” exemption. Until now, this exemption eliminated duties on imports costing less than $800. Now that it’s gone, main street businesses and consumers are starting to sound the alarm.
Pre-market trading figures hinted at a blockbuster earning report from the four companies that now account for 24% of the S&P. Connected devices Apple, Amazon, Tesla, Nvidia, AMD, and Meta, attributable for 1/4 of the S & P2000’s industry capitalization, all surged amongst 5%-6% increases in expenses. This wave is a sign of investor faith in these companies’ approach to the new – and often still murky – trade terrain.
