The US and China have reached a temporary agreement to suspend most tariffs on each other's goods for 90 days, facilitating further negotiations. Experts anticipate a significant increase in trade as companies prepare for potential changes. Though markets responded positively with sharp gains in stocks, some economists remain cautious, highlighting concerns over inflation and economic slowdown. The tariff reduction is significant, lowering China's tariffs on US goods from 125% to 10%, and vice versa for US tariffs on China. However, some tariffs, including fentanyl-related tariffs, remain in place.
The negotiations suggest that both countries realize they need each other," Andrew Collier, a senior fellow at the Mossavar-Rahmani Center for Business and Government of the Harvard Kennedy School, told Business Insider.
US-China trade should bounce back," said Kennedy. "We may see a substantial jump in cargo for companies that are worried that we will be back at this intersection in a few months, and they need to take advantage of this respite to expand their inventory.
The temporary truce slashes China's tariffs on the US from 125% to 10% and the US's tariffs on China from 145% to 30%.
Following the agreement, stocks rallied sharply on Monday, especially for tech. The Nasdaq Composite and the S&P 500 each surged around 3%, while the Dow Jones Industrial Average jumped more than 2.4%.
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