Stocks have skyrocketed worldwide after we and Chinese officials said they agreed to temporarily suspend most of the tariffs they imposed on each other.
The S&P 500 futures suggested that US stocks would rise nearly 3% higher when trading begins in New York on Monday morning. The benchmark Stoxx Europe 600 index rose about 1% during early trading.
In a joint statement released Monday after a weekend talk in Geneva, the US and China said they have reached an agreement to reduce tariffs for 90 days while trade negotiations continue.
The US will reduce tariffs on Chinese imports from 145% to 30%, and China will reduce import duties on American goods from 125% to 10%.
The statement was released late in the afternoon in Asia after most stock exchanges suspended trading that day. Earlier in the day, stocks in Japan, South Korea and mainland China were higher in anticipation of progress by easing trade tensions between the US and China.
Over the weekend, Washington and Beijing held their first meeting since ratcheting barriers to fierce trade with each other and effectively blocking much of the country's trade. After the trade conversation was over, officials from both sides promoted great progress.
The escalating trade war has made financial markets uneasy.
Economists warn that barriers that are so high that they effectively block many of the trade between the two biggest economies in the world, significantly increasing the chances of a slump. This includes Asia, where some of the largest economies, including Japan and South Korea, rely heavily on both China and the US as trading partners.
The World Trade Organization predicts that by continuing to divide the world economy into “rival blocs,” it will reduce global total product by nearly 7% over the long term. In April, the International Monetary Fund lowered its 2025 outlook for all groups in seven countries, including Germany and Japan, the world's third largest economy, primarily due to US tariffs.
Last week, China reported that exports to the US in April fell 21% from the previous year. Recession warnings are beginning to emerge in the US.
