The United States and China have agreed to a 90-day truce in their ongoing trade dispute. Both sides have committed to rolling back tariffs, a significant step toward easing tensions.
As part of the agreement, officials pledged to cut tariffs by as much as 115%, although full details of the reductions and affected goods have yet to be published. The deal follows two days of high-level negotiations in Geneva and is being hailed by US Treasury Secretary Scott Bessent as a “breakthrough moment.”
Markets responded positively, with equities rallying across Asia and Europe on hopes that the pause could lead to a longer-term resolution.
Here’s a breakdown of how the 90-day US-China trade truce and tariff cuts of up to 115% could impact key industries and markets:
1. Manufacturing and Industrial Goods
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Impact: Positive
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Why: Tariff reductions will lower costs on raw materials, components, and machinery—especially for sectors like automotive, aerospace, and heavy equipment.
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Winners: Multinationals like Caterpillar, Siemens, and General Electric could benefit from restored trade flows and improved supply chain margins.
2. Automotive
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Impact: Strongly positive
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Why: Tariffs on auto parts and finished vehicles have been a significant drag. A rollback could revive exports and reduce costs for manufacturers and consumers.
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Winners: BMW, Tesla (China plant operations), and Toyota may see improved demand and lower operating costs.
3. Technology and Electronics
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Impact: Very positive
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Why: The sector was heavily affected by earlier tariffs. Semiconductor firms and consumer electronics manufacturers stand to gain from both demand recovery and reduced component costs.
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Winners: Apple, Qualcomm, Intel, and Taiwan Semiconductor (TSMC).
4. Agriculture and Food Exports
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Impact: Positive
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Why: China is expected to resume or increase purchases of US agricultural products like soybeans, corn, and meat—previously subject to retaliatory tariffs.
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Winners: US farmers, Archer Daniels Midland, Bunge.
️ 5. Energy and Commodities
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Impact: Moderately positive
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Why: Energy exports—especially LNG and crude oil—were affected by strained trade. Lower tariffs could boost demand from Chinese buyers.
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Winners: ExxonMobil, Chevron, and Cheniere Energy.
6. Stock Markets
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Impact: Broadly positive (short term)
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Why: The agreement boosts risk sentiment, lowers uncertainty, and may lead to better corporate earnings outlooks in Q2–Q3.
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Winners: Export-heavy indices (e.g., FTSE 100, Nikkei 225, S&P 500) and emerging market equities.
⚠️ Risks and Caveats
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Temporary Nature: The 90-day window means risk remains if talks stall again.
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Lack of Detail: Without full tariff schedules and enforcement mechanisms, market enthusiasm could fade.
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Currency Volatility: FX markets may remain choppy, especially for the USD/CNY and export-reliant currencies (e.g., AUD, KRW).
