Global markets welcome fragile U.S.-China tariff truce with jubilation, but deeper trade rift remains

Global markets on Monday greeted with jubilation the news of Washington and Beijing agreeing to a 90-day tariff truce. As a result, global markets surged, temporarily putting a halt to increasing global concerns over a looming trade war between two of the world's largest economies, reported Reuters. However, the fragile ceasefire does little to resolve the fundamental rift between the world’s top two economies.

The agreement, struck over the weekend in Geneva, will see the U.S. scale back tariffs imposed last month on Chinese imports from 145% to 30%. In return, China will reduce its retaliatory duties on U.S. goods from 125% to 10%. While the move unlocks roughly $600 billion in frozen bilateral trade, it leaves many of the thorniest issues untouched — from structural trade imbalances to fentanyl flows — casting doubt over the long-term path to détente.

U.S. stocks responded with exuberance. The S&P 500 jumped to its highest level since early March, and the Nasdaq notched its best close since February. The dollar strengthened and gold prices fell, thereby signalling a modest retreat from investor caution.

Still, markets remain wary of the conflict’s potential to re-escalate.

President Donald Trump, whose trade brinkmanship has been the core of his economic policies, called the deal between Washington and Beijing as 'landmark,' and a vindication of his hardline approach.

As reported by Reuters, the temporary truce is a major win for Treasury Secretary Scott Bessent, who has emerged as a key player in shaping the White House’s evolving trade strategy. A former hedge fund executive, Bessent pushed for the 90-day reprieve, arguing it would give negotiators room to cool tensions without conceding core objectives. “Neither side wants a decoupling,” Bessent said following the Geneva talks. “We want more balanced trade.”

The Washington-Beijing deal also led to the Dow Jones Industrial Average surging by a whopping 1,160 points, or 2.8%, staying firmly within the bullish territory on Monday.

Although Washington was jubilant over the news of the deal, Beijing, for its part, decided to approach the matter with far more caution. China's state media described the talks as constructive and said it hoped the US and China find more room to further cooperation between them.

Trump has long tied trade policy to his domestic agenda, pledging to bring back U.S. manufacturing jobs and crack down on unfair Chinese practices. He has also linked tariffs to the fentanyl crisis, blaming Beijing for failing to curb exports of precursor chemicals. But his aggressive posture has unnerved voters and businesses alike. Last month, he paused most “reciprocal” tariffs on allies, though China remained a key target.

Monday’s deal also left out reinstating exemptions for low-value e-commerce shipments — a sticking point for retailers and logistics firms. Meanwhile, Bessent said no date had been set for the next round of talks, though both sides were willing to keep negotiating.

For now, the tariff pause offers a breather to jittery markets. Whether it leads to a broader reset in the U.S.-China trade relations or simply marks another lull in a long, grinding confrontation remains an open question.