Recovery of Stock Markets and Strengthening of the Dollar Following Announcement of Tariff Agreement

The United States and China have agreed to a temporary reduction of reciprocal tariffs, under which the U.S. will reduce additional tariffs imposed on imports from China in April from 145% to 30%, while tariffs on imports from the U.S. to China will fall from 125% to 10%. The new measures will be in effect for 90 days. Following this news, the dollar strengthened against other major currencies, and stock markets recovered.

Shares of European companies that were heavily impacted by the escalation in the trade conflict recovered on Monday. The biggest winner in Europe is Maersk, whose shares jumped by more than 12% after the agreement was announced. Last week, the Danish shipping company warned that container traffic between the two largest economies in the world had sharply declined due to the trade war.

Shares of luxury goods manufacturers LVMH and Kering, owner of the Gucci fashion brand, rose by 7.4% and 6.7%, respectively.

Investor sentiment was buoyed by hopes that a global recession may be averted, which spurred an increase in futures contracts on Wall Street.

Due to the tariff conflict, U.S.-China trade worth nearly $600 billion has stagnated, causing disruptions in supply chains, raising concerns about inflation caused by stagnation, and leading to job losses.

U.S. President Donald Trump rated the negotiations positively even before they concluded, stating that the two sides had agreed on ‘completely new arrangements… in a friendly but constructive manner’.

Statements from Chinese Vice Premier He Lifeng were not as explicit, but he also welcomed the ‘significant progress’ made during the negotiations.

The outcome of the U.S.-China negotiations helped to ease concerns about a decline in economic activity that was prompted last month by President Donald Trump tightening tariff measures aimed at reducing the U.S. trade deficit with the world.

– Both countries excellently represented their national interests. It is in all our interests to have balanced trade, and the U.S. will continue to strive in that direction,” stated U.S. Treasury Secretary Scott Bessent after talks with Chinese officials in Geneva.

Secretary Bessent and Trade Representative Jamieson Greer addressed reporters after negotiations with their Chinese counterparts, and both sides welcomed the reduction of disagreements.

At meetings held in Geneva over the weekend, senior U.S. and Chinese officials responsible for the economy met face-to-face for the first time since Trump returned to the White House and initiated a global tariff war, introducing particularly high tariffs on imports from China.

Bessent stated that the agreement does not cover tariffs related to individual sectors and that the U.S. will continue strategic balancing in the areas of pharmaceuticals, semiconductors, and steel, specifically in sectors where deficiencies in supply chains have been identified.

Since taking office in January, Trump has increased tariffs that U.S. importers pay on goods from China to 145%, along with tariffs on certain Chinese goods that he imposed during his first term and tariffs introduced by Biden’s administration. China retaliated by restricting the export of certain rare metals essential to U.S. weapons and electronics manufacturers and raising tariffs on imports from the U.S. to 125%.