Global stock markets rallied dramatically following news that the US and China had reached a significant trade truce. Leaders from both nations agreed on a one-year moratorium on tariff conflicts, signalling a potential thaw in their often-turbulent relationship. US President Donald Trump confirmed the news to reporters, stating simply, 'We have a deal.'
A Pact of Promises and Commitments
During a virtual speech to the US-China Business Council, Chinese Ambassador to the US Xie Feng emphasised the importance of follow-through: 'The pressing priority is to follow up on the consensus reached between Xi, Trump, and their officials, to reassure both our countries and the world economy with concrete actions and outcomes.'
China's Foreign Ministry spokesman Guo Jiakun echoed this optimism, saying China was ready to 'inject fresh momentum' into the US relationship.
From Asia to Europe, equity markets responded positively. The FTSE 100, the UK's blue-chip index, hit a new all-time high, driven by gains in the financial and energy sectors. Meanwhile, tech giants with strong earnings growth—fostered by artificial intelligence initiatives—also shared the limelight.
Strong Corporate Earnings Boost Confidence
Data from FactSet highlighted the robust performance of US companies, with the S&P 500 reporting double-digit earnings growth for the fourth consecutive quarter. Over 80% of the index's constituents beat expectations, and the projected annual earnings growth for the S&P 500 stands at nearly 14%.
Beijing's Action Plan: Easing Trade Restrictions
China's plan includes easing critical export bans that impact global vehicle production:
- The export ban on automotive computer chips will be relaxed.
- Export controls on rare earths and critical minerals will be suspended, with general licenses issued for items such as rare earths, gallium, germanium, antimony, and graphite—benefiting US end users and their suppliers.
- All retaliatory tariffs imposed since March 4, 2025, will be suspended. These tariffs affected US agricultural products including chicken, wheat, corn, cotton, pork, beef, fruits, vegetables, and soybeans.
Additionally, China committed to cooperating on curbing fentanyl exports to the US, including the shipment of precursor chemicals used in manufacturing the drug. It also agreed to terminate investigations into US companies involved in the semiconductor supply chain concerning antitrust, anti-monopoly, and anti-dumping issues.
US's Moves: Tariffs and Investigations
Effective from 10 November 2025, the US will reduce tariffs on Chinese imports related to fentanyl by 10%. Reciprocal tariffs on Chinese goods, which had been heightened, will be suspended until 10 November 2026.
In terms of investigations, the US will halt probes into Chinese firms operating in logistics, maritime, and shipbuilding sectors to prevent dominance in these areas.
The Big Win: Agricultural Trade and Economic Confidence
President Trump announced the deal following his meeting with Xi Jinping. China will purchase a minimum of 12 million metric tonnes (MMT) of US soybeans in November and December. Over the next three years (2016-2027), China committed to buying at least 25 MMT of US soybeans annually.
This renewed agricultural trade is a significant boost for US farmers, though many want more clarity rather than just pledges. If China meets its commitments, farm revenues could exceed $30 billion over the next three years.
Will the Truce Last?
While markets are buoyant now, many experts remain cautious. The trade truce is set for one year, and global observers are hopeful it will be sustained beyond that. Confidence hinges on whether both sides follow through on their promises amid ongoing geopolitical tensions.
For now, the world watches with cautious optimism as the US and China step back from the brink of a trade war. Whether this peace endures remains to be seen, but for the moment, global markets are celebrating.
Disclaimer: Our digital media content is for informational purposes only and does not constitute investment advice. Please conduct your own analysis or seek professional guidance before investing. Remember, investments are subject to market risks, and past performance does not guarantee future results.
