The just-concluded US-China trade talks in Geneva generated cautious optimism within world financial markets. The two countries announced “substantial progress” in defusing a lengthy trade war. This report looks into the instantaneous market reactions, tariff revisions, and the implications on the wider world economy due to US-China trade agreements.
US-China Trade Tariff Adjustments
During the May 11–12, 2025 talks, US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng reached key agreements. They concluded fruitful talks, addressing the ongoing issues in US-China trade. The two agreed to lower mutual tariffs substantially. US tariffs on Chinese products decreased from 145% to 60%, and Chinese tariffs on US exports declined. Such changes ease some supply chain strains, which had been adding to US inflation. Yet, the exclusion of key sectors such as semiconductors and rare earths indicates continued risks for the market.
Sector-Specific Impacts
The tariff cuts are likely to help a range of sectors. For instance, technology firms such as Apple will save as much as $1.2 billion a year on lower import duties on iPhones. Dell and HP may enjoy a 6-8% margin increase from decreased component prices. However, the US-China trade constraints on the semiconductor sector continue to limit expansion for major players like Nvidia and TSMC.
US-China Trade And Global Market Responses
Following the reductions in tariffs, US stocks experienced a significant surge due to the improved US-China trade environment. The S&P 500 futures went up by 1.4%, while Nasdaq futures went up by 2%, significantly helping the tech industry. Major indices in Asia-Pacific such as the Hang Seng and CSI 300 appreciated by 1.4% and 0.8%, respectively. The US dollar went up marginally, while the yuan gained 0.2% against the dollar, reflecting a positive sentiment in the markets.
Geopolitical And Economic Context
The trade deal is in the context of shifting geopolitical realities. In the Indo-Pacific, the Kashmir ceasefire is holding, lowering regional risk. Yet, US-China trade tensions continue, especially on intellectual property, drug trafficking, and industrial policy. Despite the deal, key structural issues remain, maintaining global economic uncertainty at high levels.
Conclusion
Though the US-China trade agreement brings near-term relief, it does not address the deeper geopolitical and economic tensions. The reduction in tariffs is short-term support for the market, but persistent disagreement over technology and industrial policy will continue to be a threat. The major upcoming economic data, including US CPI reports and Chinese GDP growth, will be essential in ascertaining if the US-China trade agreement can maintain its beneficial effect.
