The US China tariff agreement is changing the trajectory of markets

The US and China reached a preliminary agreement on the tariffs, which had sparked a major escalation since their official announcement on April 2nd. The tariffs, which amounted to 145% on Chinese imports, escalated concerns after China responded to them with a tit-for-tat response of approximately 125%.

Weeks after US President Donald Trump indicated that talks were underway with China, the US and China met in Geneva, Switzerland, and reached a deal described as positive regarding the tariffs, fueling a market recovery.

Details of the US-China tariff deal:

From the first moments, markets began reacting to the positive news that had begun to emerge about the US-China agreement.
However, the official announcement of the US-China tariff agreement fueled a recovery that specifically affected stock markets and currencies, and put pressure on gold prices, which declined significantly. In a positive move, China agreed to reduce their tariffs for 90 days. The US announced that its tariffs would be reduced from 145% to 30%, while China, in turn, would reduce tariffs on US imports from 125% to 10%.

New US-China tariff deal effect:

Financial markets received this news positively, feeling reassured that there was hope for a permanent solution between the two sides.
S&P 500 and Nasdaq futures rose by 2.5% and 3.4%, while the US dollar index rose by more than 1% against a basket of currencies, and the Chinese renminbi rose by 0.5%.
Oil prices rose, fueled by optimism that global trade would avoid the expected economic recession, with WTI crude prices rising by more than 3%.
Shares of shipping company Maersk also rose by more than 11%, underscoring the optimism about global trade following this agreement between the world's two largest economies. 

Gold, for its part, was the most negatively affected, falling by about 2.8%, losing nearly $95 to $2,330, its lowest level since the beginning of May and the largest decline since November 2024.
The euro, which benefited significantly from the dollar's weakness and declining global demand for it, declined due to fears of its declining status and the US economy's exposure to recession fears. It fell by 1.3% during the day to $1,110.

Conclusion

Many analysts pointed to the positive effects of this agreement, especially for countries that may become more open to concluding agreements with the US, which has proven that dialogue can be a fundamental pillar for reaching mutually satisfactory agreements.