Geneva: The United States and China announced a 90-day tariff reduction agreement on Monday, de-escalating a trade war that had threatened global economic stability. The deal, slashing US tariffs on Chinese imports from 145% to 30% and Chinese tariffs on US goods from 125% to 10%, ignited a global stock market surge, with major gainers in the US, Europe, Asia, and India driving unprecedented rallies. Indian markets soared alongside an India-Pakistan ceasefire, with the BSE Sensex and Nifty 50 posting their biggest single-day gains in nearly four years. The agreement, reached after high-stakes talks in Geneva, marks a pivotal step toward easing tensions between the world’s two largest economies.
The joint statement, released by US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, emphasised a shared interest in preventing a trade “embargo” that had disrupted supply chains and fueled recession fears. U.S. stock futures experienced a significant increase, with S&P 500 futures rising by 3% and Nasdaq 100 futures advancing by 4%. Additionally, shares of major technology companies such as Apple saw a gain of 2.2%, while Tesla’s premarket shares surged by 7.2%. **Indian markets rallied significantly, with the BSE Sensex climbing 2,211.16 points, a 2.78% increase, to close at 81,665.63, and the Nifty 50 advancing 694.95 points, up 2.89%, to 24,702.95, propelled by the US-China tariff truce and the India-Pakistan ceasefire.** In Asia, Hong Kong’s Hang Seng Index and Shanghai’s Composite Index posted gains, recovering from weeks of volatility.
The market upswing was widespread, driven by strong performances from key companies. The primary contributors to the Nifty’s increase included Infosys, which rose by 7.99%, Adani Enterprises, which saw a rise of 7.57%, HCL Tech, which gained 6.40%, and Shriram Finance, which increased by 7.47%. The increase in this trend was propelled by positive sentiment within the information technology, infrastructure, and financial industries. Among 4,224 stocks listed on the BSE, 3,514 recorded gains, with tourism and defence sectors also advancing due to the ceasefire, though defence stock gains were moderated by reduced tensions. Market volatility eased, as evidenced by an 18% decline in the India Volatility Index (VIX).
Globally, major gainers reflected the tariff truce’s widespread impact. In the US, Palantir Technologies (+5.1%) and Intel (+3.8%) climbed after tariff exemptions for tech products, with Palantir benefiting from a NATO AI contract. In Europe, chipmaker ASML (+4%) and luxury giant LVMH (+3.5%) led gains, driven by reduced trade war fears. In Asia, Taiwan’s TSMC (+6%) and Japan’s Toyota (+5.2%) rallied, with TSMC gaining from tech sector optimism and Toyota from stabilised supply chains. “The tariff pause has unleashed a wave of investor confidence,” said Samir Arora of Helios Capital, noting that India’s rally, alongside global tech and auto gains, may face volatility but signals recovery.
The agreement follows months of escalating tariffs, with the US imposing a 145% levy on Chinese goods and China retaliating with 125% duties on US imports, halting bilateral trade worth over $650 billion annually. The tit-for-tat measures, initiated by President Donald Trump’s second administration in April 2025, erased trillions from global stock markets and raised consumer prices, with 75% of Americans expecting cost increases, per a Reuters/Ipsos poll.
Negotiations in Geneva, led by Bessent and US Trade Representative Jamieson Greer for the US, and He Lifeng for China, focused on a “consultation mechanism” to address trade imbalances and security concerns. While the talks yielded no major concessions beyond the tariff pause, analysts view it as a pragmatic move. “The deal was better than expected,” said Geoff Yu of BNY, noting the markets’ positive reaction, including standout performances by global and Indian gainers.
However, experts caution that the 90-day truce is temporary, with issues like intellectual property theft unresolved. “A durable resolution remains elusive,” Morgan Stanley analysts wrote, though they acknowledged the momentum from gainers like TSMC and Infosys as a positive sign. China’s state media called the talks “candid and constructive,” but Beijing signalled resistance to pressure, with Foreign Ministry spokesperson Lin Jian stating, “Coercion against China will not work”.
The repercussions of the trade war have been significant, resulting in a loss of $5.8 trillion in market capitalisation for S&P 500 companies since the tariff announcements made by Trump in April 2025. Globally, European and Asian markets slumped, with France and Germany’s indices down 12% and Japan’s Nikkei 4% lower a week ago. In the first quarter of 2025, the United States experienced a contraction of 0.3% in its economy, whereas China’s growth rate decelerated to 5.4%, prompting concerns regarding the reliability of the data reported.
Since 2018, the US-China trade conflict has evolved through six stages, with tariffs rising sharply under Trump’s terms. The 2020 Phase One agreement, promising $200 billion in Chinese purchases, fell short, and Biden’s levies targeted sectors like electric vehicles. The current escalation, with US tariffs averaging 20.8% on Chinese imports by January 2025, disrupted supply chains for electronics, toys, and apparel. The suspension of tariffs has catalysed discussions on trade, prompting more than 75 nations to engage with the United States in an effort to prevent the imposition of similar duties. India and Japan have made progress in their bilateral negotiations, while the European Union is formulating its own countermeasures. “Strategic independence from the US will persist,” warned Deutsche Bank’s George Saravelos, citing policy unpredictability.
As markets celebrate, businesses remain cautious. “Tariff uncertainty won’t vanish overnight,” said Lee Branstetter of Carnegie Mellon, though he noted that gainers like Adani and Palantir reflect short-term optimism. As President Trump and President Xi Jinping are anticipated to engage in discussions shortly, the international economic landscape is poised for the forthcoming developments.
– global bihari bureau
