“Analysts Cautiously Welcome US-China 90-Day Trade Truce”

 Analysts cautiously welcomed Monday’s announcement that the US and China will significantly reduce tariffs on each other’s goods for 90 days but warned against excessive optimism about long-term resolution.

“This is a substantial de-escalation,” said Mark Williams, chief Asia economist at Capital Economics. He noted, however, that US tariffs on China remain considerably higher than those on other major economies and that Washington still appears to be encouraging allies to adopt their own trade restrictions on Beijing. “There is no guarantee this truce will lead to a lasting ceasefire,” he wrote.

Economists at Germany’s Commerzbank echoed these concerns, emphasizing that tariffs between the two nations remain far higher than levels seen before President Trump’s return to office. Neil Wilson of Saxo Markets argued that, despite US Treasury Secretary Scott Bessent’s assurances that Washington does not seek economic “decoupling,” the US is in practice pursuing separation, likely leading to a sharp drop in bilateral trade.

The announcement followed a weekend of marathon trade talks in Geneva, culminating in both nations agreeing to slash tariffs by 115 percentage points on each other’s goods for 90 days, effective May 14. The US will lower tariffs on Chinese imports from 145% to 30%, while China will cut tariffs on US goods from 125% to 10%. Fentanyl-related US tariffs will remain unchanged.

Officials from both countries emphasized continued dialogue. A new mechanism led by Chinese Vice Premier He Lifeng, US Treasury Secretary Bessent, and US Trade Representative Jamieson Greer will oversee ongoing discussions, alternating meetings between both nations or third countries as agreed.

Markets rallied on the news. Hong Kong’s Hang Seng jumped 3.4%, Germany’s DAX and France’s CAC rose over 1%, and US stock futures surged — with the Nasdaq up 3.6%. The dollar strengthened, and Brent crude climbed 2.8%.

“This buys time for a more comprehensive deal,” Wilson noted, but reiterated that underlying strategic tensions persist despite the upbeat tone from both sides.

Both economies have felt the strain. The US saw its first quarterly GDP contraction since 2022, as importers raced to front-load shipments before tariff hikes. China’s exports to the US plummeted last month, dragging factory activity to its weakest in 16 months and prompting Beijing to consider fresh stimulus.

At a Monday press conference, Bessent reiterated: “Neither side wants decoupling. We want trade — but more balanced trade.”