US-China Tariff Deal Resolves Uncertainty, Sends Stock Markets Soaring
3 minute readPublished: Monday, May 12, 2025 at 1:12 pm
US-China Trade Deal Sparks Stock Market Rally, Eases Uncertainty
The U.S. and China have struck a deal to significantly reduce import tariffs, sending global stock markets soaring. Announced on May 11, 2025, via The White House account on X, the agreement aims to de-escalate the ongoing trade war that has roiled markets for months.
According to NBC News, the deal will see U.S. tariffs on Chinese imports slashed from a staggering 145% to 30%. In response, China will lower its tariffs on U.S. imports from 125% to 10%. This news triggered an immediate positive reaction in the markets, with U.S. stock market futures experiencing substantial gains on the morning of May 12, 2025. The Dow, S&P, and NASDAQ rose by 2.68%, 3.16%, and 4.03%, respectively.
The trade war, which began on February 1 with initial tariffs, escalated dramatically on April 2 (Liberation Day) when tariffs were significantly increased. This volatility created significant uncertainty for businesses, as reported by The New York Times and The Washington Post. CEOs struggled to predict future costs, while small business owners grappled with the financial strain.
The agreement addresses key concerns that have plagued the markets, including lowered future revenues for companies, the imposition of reciprocal tariffs by other countries, and, most importantly, increased stock market uncertainty. Business leaders worldwide have welcomed the deal, viewing it as a sign that the U.S. is willing to negotiate. This has led to renewed optimism about the potential for future trade agreements.
However, it's crucial to note that this agreement is temporary, lasting only 90 days. This means the two sides must continue negotiations to prevent a resurgence of the trade war. Despite the temporary nature of the deal, the reduction in uncertainty appears to be the primary driver behind the positive market response.
BNN's Perspective: While this agreement is a positive step towards stabilizing the global economy, the short-term nature of the deal highlights the ongoing fragility of the U.S.-China trade relationship. The focus on reducing uncertainty is understandable, but a more comprehensive and long-term solution is needed to ensure sustained economic stability. The next 90 days will be critical in determining whether this is a genuine turning point or merely a temporary reprieve.
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