Donald Trump will inevitably assert Monday’s temporary ceasefire in the US-China trade war as a victory, but it appears that financial markets have read it for what it is – surrender.
Stocks were rising, and bond yields were holding talks with China after U.S. Treasury Secretary Scott Bescent’s early morning press conference in Geneva.
Similar to last week’s UK “trade agreement,” the US has not returned to its status quo before Trump arrived at the White House.
Instead, tariffs on Chinese products will be reduced from 145% to 30%. The first is 90 days. In return, China has reduced its own tariffs on US imports to 10% from the 125% it imposed in retaliation against the White House.
It shows a major change in terms of trade between the two countries even before Trump came to power, but is effectively far below the trade embargo.
Both sides have pledged to continue the conversation, but the statement issued from the White House did not mention other complaints previously raised about China, including its original weaknesses.
Instead, the statement welcomed “the importance of sustainable, long-term and mutually beneficial economic and trade relations.” The language was quite different from Trump’s liberation day speech about the United States being “populated, plundered, raped, plundered and plundered.”
In other words, the president fell into the ground. He may have been shaking with the wobble of the market, but it seems plausible that the disastrous warnings from retailers about empty shelves (backed by data showing shipments to US ports) may have strengthened the hands of trade moderates in the administration.
Faced with warnings about a lack of toys, Trump told reporters that children should be happy with “two dolls, not 30 dolls” and could “collect a few dollars” than usual. But it is difficult to imagine even this most bullish person of the president to withstand the attacks that come in his way if he begins to be seen as a blame for the lack of replied style of key commodities in the world’s largest economy.
Instead, the White House appears to have chosen a tactical hideaway. The China-US conflict has always been the hottest theatre of Trump’s conflict in the trade war, with a longer history and deeper general support than his quiet attacks on Mexico and Canada.
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If Trump is actually ready to succumb to Beijing, it signals that some of the other positive aspects of his trade policy may be negotiable.
But what Bescent and his Chinese counterparts haven’t erased is the corrosive uncertainty that has captured investors across the global economy since Trump’s “liberation day” tariff announcement.
China’s tariffs have only been temporarily cut, and for now many countries are waiting to negotiate where tariff levels will end in July, with Trump’s “mutual” taxation after the other 90-day suspension.
Meanwhile, businesses across the global trading system are wondering what policies are likely to stick, and could be tempted to continue working in the US if possible.
Also, there is a 30% tariff remaining on exports to China, which leaves us with a complete picture of the two big economic forces, where the two big economic forces are being separated.