Markets Soar After US-China Tariffs Scaled Back: Evening Briefing - Bloomberg

Monday, May 12, 2025 7:14 PM

Friends + Interlocutors,

Trump comes down to earth…or his head-fake worked. This trajectory looks like a win-win. Whatever the final outcome, it will be an improvement for fair trade in the U.S. relationship with China. Nothing more could be expected. 

Trump, for all his confusion and bluster, must be given credit for it. His treasury secretary Scott Bessent is one of the few adults in MAGA world and should be able to complete the job on his own.

Patrick
===== 
P.S. My emphasis in red. 

https://www.bloomberg.com/news/newsletters/2025-05-12/markets-soar-after-us-china-tariffs-scaled-back-evening-briefing-americas?cmpid=eveus&utm_medium=email&utm_source=newsletter&utm_term=250512&utm_campaign=eveus

Markets Soar After US-China Tariffs Scaled Back

Bloomberg evening newsletter...

Xi Jinping’s decision to stand his ground against Donald Trump paid dividends to the Chinese leader Monday. After two days of high-stakes talks in Switzerland, trade negotiators from the world’s biggest economies announced a massive if temporary de-escalation of tariffs, with the US slashing duties on Chinese products to 30% from 145% and Beijing dropping its levy on most goods to 10%.

The US administration began to retreat on promised levies and make public entreaties to Beijing shortly after markets nosedived in response to Trump’s “reciprocal” tariff rollout on April 2. The retaliation that followed the announcement had taken duties to levels that for many companies effectively blocked trade, causing widespread uncertainty and fueling warnings of a self-induced US recession.

The dramatic reduction in tariffs exceeded expectations in China and sent the dollar and stocks soaring—providing some much-needed market relief for the US president, who is facing pressure as inflation looks set to speed up at home.

China equities also surged as the deal—though only a 90-day delay—ended up meeting nearly all of the Chinese president’s core demands. The “reciprocal” tariff for China, which Trump set at 34%, has been suspended—leaving America’s top rival with the same 10% rate that applies to US allies like the UK.

“This is arguably the best outcome that China could have hoped for—the US backed down,” said Trey McArver, co-founder of research firm Trivium China. “Going forward, this will make the Chinese side confident that they have leverage over the US in any negotiations.” 

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