The significant tariffs implemented have heightened concerns over a potential decline in trade between the two nations, as US ports are witnessing a notable decrease in the number of vessels expected from China.
Beijing is growing more apprehensive regarding the potential effects of the tariffs on its economic landscape. Factory output has begun to decline, with reports indicating that some companies are resorting to layoffs as production lines for goods destined for the US come to a standstill.
In a statement regarding the agreement, Bessent remarked, “The consensus from both delegations this weekend is that neither side desires a decoupling.”
The imposition of these exceptionally high tariffs has effectively created a situation akin to an embargo, a development neither party desires.
“There is a clear desire for trade, emphasizing a more balanced approach. Both parties appear dedicated to reaching this goal.”
China’s commerce ministry announced that the recently reached agreement with the United States represents a significant advancement in efforts to “resolve differences” and “lay the foundation to bridge differences and deepen cooperation”.
The agreement announcement positively impacted stock markets, as evidenced by Hong Kong’s benchmark Hang Seng Index, which closed the day with a 3% increase. The Shanghai Composite Index in China concluded its trading session before releasing the deal’s specifics, finishing the day with a 0.8% increase.
Europe stocks experienced an uptick, with early signals suggesting that the primary US stock markets are poised to open higher by 2-3%.
Shares in shipping companies have significantly increased following the deal, with Denmark’s Maersk rising over 12% and Germany’s Hapag-Lloyd experiencing a 14% surge.
Maersk told the BBC that the US-China agreement represents “a step in the right direction.”
“The expectation is that this initiative will establish a groundwork for the parties involved to negotiate a permanent agreement that can provide the long-term predictability essential for customers.”
In recent weeks, the gold price, bolstered by its reputation as a safe haven amid tariff-related disruptions, declined 3%, settling at $3,224.34 per ounce.
In a collaborative announcement, the two nations revealed plans to create “a mechanism to continue discussions about economic and trade relations,” with leadership from Scott Bessent and China’s Vice Premier He Lifeng.
Both countries expressed the view that ongoing discussions could effectively address each party’s concerns about their economic and trade relationship.
President Trump has consistently expressed dissatisfaction with the trade imbalance between the United States and China, highlighting that the US imports significantly more goods from China than it exports.
Concerns have been raised regarding the inadequate safeguarding of intellectual property rights for American companies operating in China, particularly highlighting issues such as the compelled transfer of technology.
Concerns are mounting regarding purported subsidies from the Chinese government that is believed to provide local companies with an unfair competitive edge. Beijing has countered these claims by asserting that Washington engages in similar practices.
Upon President Trump’s initial announcement of tariffs, he contended that these measures would enhance American manufacturing and safeguard employment opportunities.
However, numerous economists contended that this would adversely affect global economic growth and lead to increased prices for various products for consumers in the United States.
In a recent update, the International Monetary Fund revised its growth forecast for the global economy for the current year from 3.3% to 2.8%. The organization cites tariff uncertainty as a significant factor that could disrupt supply chains and compel firms to halt or reduce their investment activities.
