US-China Dial Down Trade War With 90-Day Tariff Truce; Futures Point to Bumper Wall Street Open

The much-awaited joint statement by China and the U.S. following confirmation regarding the striking of a trade deal suggests a drastic cut in reciprocal tariffs to 10% by both countries.

A statement released by the White House said the action was taken to recognize the importance of bilateral economic and trade relationships and of sustainable, long-term, and mutually beneficial economic and trade ties.

Washington has committed to modify the levies on Chinese imports by suspending the 24% rate for an initial period of 90 days, while retaining the remaining 10% rate. 

This would mean the combined 145% tariffs on Chinese imports will be reduced to 10% by May 14, while the 20% duties related to fentanyl will stay in place. The maximum U.S. tariffs on China would be 30%.

China, for its part, has responded by cutting duties on U.S. imports to 10% from 125%, reciprocating the U.S. move to suspend the 24% rate for a 90-day period. 

U.S. Treasury Secretary Scott Bessent reportedly said at a news conference, “We had very productive talks, and I believe that the venue, here in Lake Geneva, added great equanimity to what was a very positive process.”

“We have reached an agreement on a 90-day pause and substantially move down the tariff levels. Both sides on the reciprocal tariffs will move their tariffs down 115%.”

Following the release of the joint statement, stock futures tied to the S&P 500 and the Nasdaq 100 futures surged up by 2.81% and 3.64%, respectively.

The Dow and Russell 2000 futures rose by over 2% and 4%, respectively.

The Invesco QQQ Trust (QQQ) ETF is down 4.41% this year, the SPDR S&P 500 ETF (SPY) has lost 3.4%, and the iShares MSCI China ETF (MCHI) has gained about 14%.

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