US-China trade deal: A potential game-changer for markets, averred the experts
U.S. President Trump announces that a deal with China will expand business opportunities for American companies.
Pondering the market implications of global trade negotiations and latest economic data, UBS financial advisor Ryan Lynch and Michael Lee Strategy founder Michael Lee shared their insights.
In a groundbreaking announcement, President Donald Trump declared that the government has reached a tentative agreement with China to lower tariffs temporarily while both parties negotiate a conclusive accord. Trump asserts this agreement will pave the way for American corporates to enter the Chinese market.
"The primary focus is on the opening of China, and they've agreed to do that, but it'll take a while to formalize the deal," Trump explained, acknowledging the time needed to draft a formal agreement.
He further opined that giving US companies unrestricted access to China's market would create numerous job opportunities, benefiting both economies when China might particularly require them. Trump reiterated that expanding market access for American businesses is key to rebalancing the trade relationship between the two nations, including eliminating non-tariff barriers that hinder trade.
*US, CHINA AGREE TO REDUCE TARIFFS BY 50% FOR NEXT 90 DAYS*
Trump emphasized that the opening of China is crucial for fostering American businesses. (Image Source: Chris Kleponis/CNP/Bloomberg via Getty Images / Getty Images)
"For years, China has had no restrictions on our country, and they refused to open theirs to us. It never made sense, and it wasn't fair. And now, they've agreed to fully open China – and I believe it will have a positive impact on both countries," Trump stated optimistically.
China also pledged to eliminate all non-monetary barriers, which Trump described as "extensive."
*TRUMP USING AMERICAN ECONOMY'S MUSCLE TO PROMOTE US EXPORTS TO CHINA: LUTNICK*
Duties on imported goods, commonly known as tariffs, act as taxes paid by U.S. importers, who often pass these higher costs on to consumers through increased prices. (Image Source: Bloomberg via Getty Images / Getty Images)
According to Trump, the "reciprocal" tariffs that were introduced in a White House ceremony on April 2 would be slashed from 125% to 10%, lowering the overall tariff on Chinese imports from 145% to 30% for a 90-day period. Simultaneously, China would decrease its tariffs from 125% to 10%.
"Yesterday, we established a new dynamic with China," Trump said, discussing the successful negotiations in Geneva. "We mutually agreed to reduce the tariffs that were imposed after April 2nd to 10% for 90 days, allowing negotiations to continue over the more significant structural issues."
"This reduction does not include the tariffs already in effect, nor tariffs on cars, steel, aluminum, or pharmaceuticals, as we aim to resurrect the pharmaceutical industry in the United States," he added.
*TRUMP: TARIFFS ARE INSPIRING DOMESTIC INVESTMENT AND STRUGGLING CHINA*
As China and President Xi Jinping collaborate on a final trade agreement, Trump characterized the trade negotiations as "amicable" and highlighted the potential benefits for China's economy.
"Our relationship is strong, and we're not intent on harming China; China has been severely impacted. They shut down factories, faced widespread protests, and were relieved to negotiate with us," Trump said.
Furthermore, Trump referenced China's failure to comply with the "phase one" trade deal he reached with Beijing during his first term. Treasury Secretary Scott Bessent had previously stated on FOX Business Network's "Kudlow" that the USA will have to take non-compliance into account during negotiations.
- The recent US-China trade deal, which includes a temporary tariff reduction, is seen as a potential game-changer for markets by financial experts.
- In the agreement, China has agreed to lower tariffs and fully open its markets to American businesses, a move that could significantly impact both economies.
- President Trump believes that this increased market access will lead to job creation and benefits for both the US and Chinese economies.
- Taxes, in the form of tariffs on imported goods, play a crucial role in the negotiations, with President Trump stating that reducing these taxes could inspire domestic investment and potentially help China's struggling economy.
