Global Stocks Surge as U.S., China Pause Trade War with Temporary Tariff Truce

WASHINGTON: Global stock markets rallied on Monday after the United States and China agreed to a 90-day pause in their ongoing trade war, reducing steep tariffs and providing temporary relief to investors fearing a global recession. The U.S. will lower tariffs on Chinese goods from 145 per cent to 30 per cent, while China will cut duties on U.S. imports from 125 per cent to 10 per cent, as part of the short-term agreement.

Financial markets responded positively, with the S&P 500 hitting its highest level since March and the Nasdaq reaching a peak not seen since February. The dollar gained strength, while gold, a traditional safe-haven asset, dipped. However, the underlying issues—such as the U.S. trade deficit with China and concerns over the fentanyl crisis- remain unresolved.

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China also agreed to remove export restrictions on rare earth minerals, which are key for high-tech manufacturing, and lift countermeasures issued since April. Despite optimism in markets, many businesses remain cautious due to the temporary nature of the deal and lack of clarity on long-term solutions. U.S. Treasury Secretary Scott Bessent, who negotiated the truce, emphasised that both countries are committed to balanced trade but acknowledged that deeper structural issues will take time to resolve.

President Trump hailed the deal as a major win for American manufacturing and workers, though critics argue it represents a retreat in the face of economic fallout. Meanwhile, industry leaders and small businesses expressed hope for stability, but warned that uncertainty continues to cloud future trade decisions.