As a result, the US will cut tariffs on Chinese goods from 145 per cent to 30 per cent for a 90-day period, while China will lower its tariffs on US imports from 125 per cent to 10 per cent over the same timeframe. Equity markets have responded positively, with Chinese and Hong Kong stocks rallying on the news. 

“This short-term reprieve is an encouraging signal for markets and should help restore some confidence. However, while the headline tariff cuts are sharp, they are also time-limited. But for now, sentiment may matter more than substance for market confidence – and domestic political support – than the content of any substantive agreement,” Stuart Rumble, head of investment directing, Asia Pacific, , said.

“With talks continuing, the key issues are whether a full deal to lower tariffs permanently in exchange for mutually beneficial concessions can be agreed. We think probably yes, but at tariff levels which, while well down from the peaks, will be up from where they were at the start of Trump’s second term (and maybe up from here). While both sides came out of the talks saying they weren’t seeking “economic de-coupling,” the US highlighted “five or six strategic industries” (think pharmaceuticals or steel) where it’s looking for “strategic rebalancing,” Diggle added.