China-US Tariff Truce: US Stock Market Soars – Opportunity or Disaster?

● Tariff Cut, US Stocks Soar?

US-China Tariff Suspension: Key Reasons for the US Stock Market Surge and Future Global Economic Outlook

Key Content Summarized in This Article

– Reasons for the surge in major US stock markets (Nasdaq, Dow, S&P 500, Russell 2000) after the US-China tariff suspension announcement
– Changes in tariff rates between the two countries, details of negotiations, and the 90-day suspension
– Analysis of the meaning of Trump’s additional remarks (fentanyl tariffs, signals for negotiations with Europe, etc.)
– Interpretations from economic experts and major institutions such as the Wall Street Journal and Bloomberg
– Stocks that have surged and the impact on industries within the market
– US-China trade conflict and the global economy (growth rate, inflation, risk of stagflation, interconnectedness of the US-China-Europe)

Now, let's organize them one by one in chronological order.

1. US-China Tariff Suspension Announcement and Stock Market Surge

– The US-China tariff suspension was officially announced on May 14, 2024.
– The Nasdaq index surged 4%, the Dow rose 2.5%, the S&P 500 increased by 3%, and the Russell 2000 index, mainly composed of small-cap stocks, also rose 3.6%.
– This rally is a significant rebound from the lowest point in the stock market after Trump’s declaration of “tariff enforcement.”
– Investor sentiment is mixed with expectations of “US stock bubble resumption?” and “breakthrough of previous highs.”

2. Tariff Details and Suspension Period

– China reduces tariffs on US products from 125% → 10%
– The United States reduces tariffs on Chinese goods from 145% → 30%
– Both countries’ ‘tariff reductions’ are in the form of a 90-day suspension and are not long-term promises.
– Effective from May 14, tariffs are set “much lower” than market expectations.
– Additionally, the fentanyl tariff (20%) is on the negotiating table, suggesting the possibility of further tariff reductions in the future.
– Trump mentioned, “There will be tariff reinstatement if certain conditions are not met, but it will not go up to 145%.”
– China is also in the process of “agreeing to market opening,” but the scope or specific areas are still unclear.
– This measure is perceived more as a ‘signal’ from each other in the negotiation phase rather than a one-time event.

3. Trump’s Message and Potential Policy Changes

– Trump plans to have further talks with Xi Jinping after declaring a ceasefire in negotiations with China.
– With the fentanyl agreement, US→China tariffs may be reduced to 10%.
– Europe (EU) is designated as the next target, increasing tension.
– Trump sends a message, “We welcome economic cooperation contact from the EU at any time” → Diversification strategy for trade targets
– The radical shift in this tariff negotiation is largely due to the backlash from Trump’s main supporters (small business owners, etc.) against the sharp rise in tariffs (Fox News, Bloomberg observations).

4. Interpretations by Major Economic Institutions and Experts

– Bloomberg Economics: “The risk of stagflation has decreased by nearly half.”
– Fed Trade Model: “Downward pressure on GDP by 1.5% over the next 2-3 years, core inflation (PCE) rises by 0.9%p”
– Goldman Sachs: “The impact is limited, with an expected decrease in the real tariff rate of less than 2%p. The total tariff rate is still high compared to market expectations.”
– PolyMarket·Kalshi (prediction market): “The probability of a US recession plunges below 40%”
– The market is generally positive, but there is ‘caution’ regarding the results and sustainability of additional negotiations.

5. Market-Industry Impact and Capture

– Strong rebound for Amazon (8%↑), Apple (6%↑), and Tesla (7%↑), which were heavily impacted by the trade war
– The stocks with the largest decline in the last month rose sharply with this news
– Strong performance in IT, electric vehicles, consumer goods, and semiconductors, which are highly dependent on the China-US supply chain
– Interest rate, dollar, and commodity markets in “wait-and-see → reversal mode”
– Investors now recognize “Trump’s remarks” = market direction trigger

6. Additional Interpretations and Risks by Issue

– The scope of this agreement is surprisingly large, causing a major shock and excitement in the market.
– Trade war is only a “temporary truce,” with the risk of additional breakdowns after 90 days still remaining.
– Experts point out “possibility of hardliners’ backlash → tariff re-strengthening, concerns about China’s trade surplus with the US increasing”
– Even with tariff easing, the trend of the US reducing imports of Chinese products is expected to continue
– Possibility of US-China, US-Europe fronts expanding… closely linked to global economic security issues
– Ultimately, the core of trade negotiations boils down to “policy leadership = market trust”

7. Global Economic Outlook and Investor Response Strategies

– Mitigation of US-China trade conflict “positive but uncertainty remains”
– Major market keywords such as tariffs, interest rates, growth rates, inflation, and global supply chains are highlighted
– Instead of “premature optimism,” investors must respond flexibly according to policy signals/negotiation volatility and major leader remarks

< Summary >
The US stock market surged due to the US-China tariff suspension announcement, and both the market and experts have mixed expectations and caution, focusing on major economic keywords (trade war, tariffs, supply chain, growth rate, inflation). The negotiations between the two countries are a temporary truce, but policy leadership and market sentiment will determine the future direction. Investors and global companies must react quickly while closely monitoring Trump’s remarks and the progress of negotiations.

Summary of US Stock Market and Global Economic Outlook After US-China Tariff Suspension Announcement

US stock market (Nasdaq, Dow, S&P 500, Russell 2000) surged due to US-China tariff suspension
Both countries significantly reduced tariff rates, applied a 90-day suspension, and left room for additional negotiations
Trump’s remarks and policy changes are emerging as the biggest variables in the stock market and trade war
Economic experts are giving short-term positive evaluations while also warning of uncertainties and additional risks
Major keywords: trade war, tariffs, growth rate, inflation, supply chain
Investors must respond flexibly and pay attention to leader remarks and policy triggers

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