Asian Markets Rise After US, China Agree to Cut Majority of Tariffs

Global markets rose, while the yuan and the US dollar both surged after trade talks in Switzerland between China and the US on the weekend ended on a positive note.

Key details revealed on Monday were: The two sides agreed to lower tariffs for 90 days before May 14, with Beijing cutting levies on US goods from 125% to 10% and Washington slashing duties on Chinese imports from 145% to 30% (the latter still includes a 20% fentanyl levy).

China also said it would suspend or cancel non-tariff measures imposed on the United States – adding seven rare earths to its export control list last month – shortly after President Donald Trump imposed his ‘reciprocal tariffs’ on April 2.

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US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer said the talks yielded “substantial progress” toward a “deal” to reduce the bilateral trade deficit, while Chinese officials said the sides had reached an “important consensus” and agreed to launch a new economic dialogue forum.

“Both countries represented their national interest very well,” Bessent said on Monday. “We both have an interest in balanced trade, the US will continue moving towards that.”

Bessent was speaking alongside Greer after the weekend talks in which both sides had hailed progress on narrowing differences.

“The consensus from both delegations this weekend is neither side wants a decoupling,” Bessent said. “And what had occurred with these very high tariffs … was the equivalent of an embargo, and neither side wants that. We do want trade.”

Chinese Vice Premier He Lifeng said a joint statement would be released in Geneva on Monday. Vice Commerce Minister Li Chenggang said it would contain “good news for the world.”

On Monday a spokesperson for China’s Ministry of Commerce said: “This move meets the expectations of producers and consumers in both countries, as well as the interests of both nations and the common interest of the world.

“We hope that the US side will, based on this meeting, continue to move forward in the same direction with China, completely correct the erroneous practice of unilateral tariff hikes, and continually strengthen mutually beneficial cooperation.”

‘Far above expectations’

Financial markets have been on edge for signs of a thaw in a bitter US-China trade war that has already begun to disrupt supply chains, prompt layoffs and raise wholesale prices.

But the mood of investors was buoyed by remarks from both sides on Sunday and Monday, plus remarks by some analysts, who rated the outcome as close to a ‘best-case scenario’.

S&P 500 futures rose nearly 3% on Monday, while the tech-heavy Nasdaq Composite futures jumped by more than 3.5% during Asian trading in the afternoon. Hong Kong’s Hang Seng index closed about 3% higher, while the Nikkei was up 0.4% and the BSE Sensex in Mumbai climbed by 3.65%.

The Chinese yuan hit a six-month high, while the US dollar gained against other major currencies, and the price of gold fell.

William Xin, the chair of the hedge fund Spring Mountain Pu Jiang Investment Management, told Reuters: “The result far exceeds market expectations. Previously, the hope was just that the two sides can sit down to talk, and the market had been very fragile. Now, there’s more certainty. Both China stocks and the yuan will be in an upswing for a while.”

Hu Xijin, the former editor of the Global Times, a nationalist Chinese tabloid, said on social media the agreement was a “great victory for China in upholding the principles of equality and mutual respect”. Hu noted on Weibo that the recently agreed UK-US trade deal maintained the US’s 10% tariff on UK imports, “while the UK did not implement reciprocal measures.”

Wang Wen, the head of the Chongyang Institute for Financial Studies at Renmin University in Beijing, said: “This is an unexpected achievement in Sino-US tariff negotiations.”

But Wang urged caution, saying the agreement “does not represent the resolution of the structural contradictions between China and the United States, nor does it mean that there will be no friction and serious differences between China and the United States in the future”.

‘A very constructive two days’

Greer described the Geneva meetings’ conclusion as “a deal we struck with our Chinese partners” that will help reduce the $1.2 trillion US global goods trade deficit.

“And this was, as the secretary pointed out, a very constructive two days,” Greer said. “It’s important to understand how quickly we were able to come to agreement, which reflects that perhaps the differences were not so large as maybe thought,” Greer said.

The US trade chief called He, Li and Vice Finance Minister Liao Min “tough negotiators.”

Bessent said there was “robust” discussion on fentanyl – a Chinese opioid blamed for hundreds of thousands of deaths in the US. He also reportedly said that further talks could lead to “purchasing agreements” by China.

Vice Premier He, speaking to reporters at China’s mission to World Trade Organization, described the talks as “candid, in-depth and constructive” on issues of concern to both countries.

“The meeting achieved substantial progress, and reached important consensus,” He said, drawing applause from a large audience of Chinese officials present at the WTO office.

WTO chief ‘pleased’

He also met with WTO director-general Ngozi Okonjo-Iweala, who said she was “pleased with the positive outcome” of the talks and urged the two countries to build on momentum to mitigate trade tensions.

The WTO has ruled against Trump’s past tariffs on Chinese goods, but the cases have been stalled in the WTO’s paralysed appellate body due to the US blocking judge appointments.

The US and China agreed to establish a new consultation mechanism for trade and economic issues, with relevant details to be finalized as soon as possible, He added.

China and the US have convened numerous consultation bodies to try to resolve trade and economic differences in recent decades, including the Economic Working Group that former president Joe Biden’s Treasury secretary Janet Yellen established with Vice Premier He in 2023.

These dialogues have provided forums for airing bilateral grievances, but have done little to advance Washington’s longstanding goal to shift China’s state-dominated, export-driven economic model toward one driven by consumer spending.

Tariff blitz

The meeting was the first face-to-face interaction between senior US and Chinese economic officials since Trump took office and launched a global tariff blitz, declaring a national emergency over the US fentanyl crisis and imposing a 20% tariff on Chinese goods in February.

Trump followed with a 34% “reciprocal” duty on Chinese imports in April, and subsequent rounds pushed the rates into triple digits, bringing nearly $600 billion in two-way trade to a standstill.

China had insisted that tariffs be lowered in any talks. Trump said on Friday that an 80% tariff on Chinese goods “seems right,” suggesting for the first time a specific reduction target.

Greer said there was a lot of groundwork done before the Geneva meetings on Saturday and Sunday, and that the result would address the national emergency that Trump declared over growing US trade deficits.

“We’re confident that the deal we struck with our Chinese partners will help us to work toward resolving that national emergency,” Greer said.

Trump: ‘Total reset’

Earlier on Sunday, White House economic adviser Kevin Hassett said the Chinese were “very, very eager” to engage in discussions and rebalance trade relations with the US.

Hassett also told Fox News’ Sunday Morning Futures program that more foreign trade deals could be coming with other countries as soon as this week. Last week’s limited trade deal with Britain left 10% US duties in place on many UK products.

Hassett said he had been briefed by US Commerce Secretary Howard Lutnick on two dozen pending deals in development with USTR Greer.

“They all look a little bit like the UK deal but each one is bespoke,” Hassett said.

Late on Saturday, Trump gave a positive reading of the talks, saying on his Truth Social media platform the two sides had negotiated “a total reset… in a friendly, but constructive, manner.”

The teams met at the gated villa of Switzerland’s UN ambassador, overlooking Lake Geneva in the leafy suburb of Cologny. Black Mercedes vans with sirens shuttled to and from the venue, bathed in bright sunshine.

Neutral Switzerland was chosen as the venue following approaches by Swiss politicians on recent visits to China and the US.

Washington is seeking to reduce its $295 billion goods trade deficit with Beijing and persuade China to renounce what Washington calls a mercantilist economic model, a shift that would require politically sensitive domestic reforms.