Top Stock Gainers Due to U.S.-China Trade Tariff Reduction
China's Boom Once More: US Slashes Tariffs on Chinese Imports
It looks like the US-China trade war is cooling off, as the US has cut tariffs on Chinese imports significantly. The new trade agreement slashes US tariffs from a whopping 145% to just 30%, and China's tariffs on US goods from a jaw-dropping 125% to a mere 10%. But analysts warn about political risks and the continued issue of the US trade deficit with China.
Wanna learn more about the nitty-gritty details?
This agreement marks a notable but cautious de-escalation of trade tensions between the US and China following months of hefty tariff impositions earlier in the year. The agreement, reached after talks in Geneva, involves both sides reducing tariffs by a combined 115%. China has suspended its initially announced 34% tariff on US goods for 90 days, but keeps a 10% tariff during this period. The US, on the other hand, will maintain a baseline tariff on Chinese goods but has agreed to remove retaliatory tariffs and countermeasures enacted since early April 2025.
This agreement should modestly ease the burden on businesses engaged in bilateral trade, particularly in sectors like manufacturing and agriculture, which were hard-hit by previous tariff hikes. However, the immediate impact is described as modest, with the US effective tariff rate falling only about 10 basis points, suggesting this is a first step, not a sweeping removal of trade barriers.
The agreement also sets a path for ongoing discussions aimed at opening Chinese markets for American exports, which could expand opportunities for U.S. exporters if successful. This is crucial for addressing the longstanding trade deficit and offshoring concerns. Despite the progress, significant political risks and uncertainties remain. The political climate surrounding trade remains fluid, and the possibility of revert to higher tariffs or new trade barriers remains a real risk. Additionally, the current US administration's broader policy agenda indicates that trade and economic relations could be influenced by domestic political priorities beyond tariffs alone.
Businesses may still face challenges in supply chain planning due to the evolving tariff landscape and non-tariff measures that have been temporarily suspended but could return depending on future negotiations. The trade war and tariffs have historically led to supply chain disruptions, and companies will likely approach the current agreement with cautious optimism while preparing for potential volatility.
In conclusion, the recent US-China trade agreement should positively influence the business environment by lowering trade costs and setting the stage for improved market access. However, the impact remains limited in the short term due to retained tariffs and ongoing political risks that could affect the long-term stability of bilateral trade relations. Businesses and investors should remain vigilant, as further negotiations and geopolitical developments will shape the ultimate effects on global trade and economic growth.
Just another day in the rollercoaster that is global trade...
What could this mean for finance and investing in businesses engaged in bilateral trade between the US and China?
This cautious de-escalation of trade tensions, as shown in the recent US-China trade agreement, may offer a modestly easier business environment for companies in sectors like manufacturing and agriculture. However, given the retained tariffs and ongoing political risks, businesses and investors should approach this agreement with cautious optimism and remain vigilant for potential volatility.
