Global
Stocks Jump After U.S. and China Cut Tariffs
A temporary
reduction in punishing tariffs, agreed after weekend talks between American and
Chinese officials, signaled a de-escalation in the trade war between the
world’s two largest economies.
River Akira
Davis
By River
Akira Davis
Reporting
from Tokyo
https://www.nytimes.com/2025/05/11/business/us-china-trade-stock-market.html
Published
May 11, 2025
Updated May
12, 2025, 4:35 a.m. ET
Stocks
surged around the world after U.S. and Chinese officials said they agreed to
temporarily suspend most of the tariffs they have imposed on each other.
Futures for
the S&P 500 suggested that U.S. stocks would open nearly 3 percent higher
when trading begins in New York on Monday morning. Futures for the tech-heavy
Nasdaq climbed nearly 4 percent.
Hong Kong’s
benchmark Hang Seng Index jumped about 3 percent, while the Stoxx Europe 600
index rose about 1 percent during early trading.
In a joint
statement, released on Monday after weekend talks in Geneva, the United States
and China said they had reached an agreement to reduce their respective tariffs
for 90 days while trade negotiations continue.
The United
States would reduce the tariff on Chinese imports to 30 percent from its
current 145 percent, while China would lower its import duty on American goods
to 10 percent from 125 percent.
After the
statement’s release, the U.S. dollar strengthened against a wide range of
currencies. U.S. Treasury yields also rose.
Over the
weekend, Washington and Beijing held their first meetings since ratcheting up
tit-for-tat trade barriers on each other, effectively blocking much of the
trade between the countries.
Before
discussions began, investors had relatively low expectations for a breakthrough
at the talks that would result in a meaningful reduction in tariffs. After the
trade conversations concluded, however, officials from both sides touted
significant progress.
That was
enough to edge stocks higher in Japan, South Korea and mainland China during
the Asia trading day. Details of the U.S.-China tariff agreement were announced
late in the afternoon in Asia, after most stock exchanges had stopped trading.
The stocks
most exposed to global trade flows surged on the news. For example, A.P.
Moeller-Maersk and Hapag-Lloyd, two of the world’s largest shipping companies,
jumped more than 10 percent.
Economists
have warned that U.S.-China trade tensions significantly increased the
possibility of an economic downturn.
The World
Trade Organization has forecast that the continuing division of the global
economy into “rival blocs” could cut global gross domestic product by nearly 7
percent over the long run.
In April,
the International Monetary Fund lowered its 2025 outlook for all Group of 7
nations, including Germany and Japan, the world’s third- and fourth-largest
economies, due largely to U.S. tariffs.
Last week,
China reported that its exports to the United States in April dropped 21
percent from a year earlier. Recession warnings are beginning to emerge in the
United States.
River Akira
Davis covers Japan, including its economy and businesses, and is based in
Tokyo.
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