Gold has dropped notably today, as investors shun safe-haven assets. The price of an ounce of gold is now down 3.4% today at $3,211, as riskier assets such as shares are snapped up instead. Analysts at Dutch bank ING have lifted their forecast for China’s growth this year, following this morning’s agreement with the US. ING predict there will now be a jump in exports from China to the US, which had dropped once American imports importers faced paying a 145% tariff on goods. Lynn Song, ING’s chief economist for Greater China, explains: In terms of impact on China’s growth, the 90-day ceasefire will upgrade our second and third quarter growth outlook. We suspect that China’s May and June exports to the US will bounce back sharply as importers with depleted inventories will take advantage of the ceasefire to resume imports. Depending on how talks proceed, we could see a frontloading of exports again in July and August, especially if there is not much clarity on a longer-lasting bargain being struck heading into the later stages of the 90-day period. We are reverting our forecast for the year back to 4.7%, with further upside possible if a bilateral agreement is reached within the 90-day period. Over in Toyko, there are reports that Nissan Motor has decided to cut another 10,000 jobs globally. Added to previously announced cuts, it would increase Nissan’s total layoffs to about 20,000 or 15% of its workforce, Japan’s public broadcaster NHK reported. Last month, Nissan announced it expects to lose as much as £4bn this year, as its turnaround plan proves more costly than expected. Like other carmakers, it has also been hit by Donald Trump’s tariffs, which include new levies on cars made overseas. Danish shipping group Maersk has welcomed the de-escalation between the US and China. Maersk says the agreement to introduce a 90-day pause on tariffs and reciprocal duties was a step in the right direction. Maersk’s share price has surged by 12.5% this morning, which reflects relief in the markets about this morning’s announcement. Back in the City, shares in UK meat producer Cranswick have tumbled after Tesco, Sainsbury’s, Asda and Morrisons all suspended supplies from a Lincolnshire pig farm linked to abuse against pigs. Cranswick is the biggest faller on the FTSE 250 index of medium-sized companies, down 7.5%. My colleague Sarah Butler reported yesterday: Secretly filmed footage has shown farm workers at Northmoor Farm appearing to grab piglets by their hind legs and smashing them on to the hard floor – a banned method of killing known as blunt force trauma or “piglet thumping”. Other harrowing footage from the farm owned by one of the UK’s biggest pig meat producers, Cranswick, showed a sow being kicked and beaten with metal bars, as well as a botched killing that left an animal writhing in agony, as first reported by the Mail on Sunday. One worker who failed to kill a sow with several shots from a bolt gun, reportedly told an undercover investigator: “Don’t let nobody see you doing like what we did [sic].” A truce, although welcome, is not the same as a peace treaty. Mark Williams, chief Asia economist at Capital Economics, points out that “a lasting ceasefire” can’t be guaranteed, telling clients: The US and China have each suspended for 90 days all but 10% of their Liberation Day tariffs and cancelled other retaliatory tariffs. This is a substantial de-escalation. However, the US still has much higher tariffs on China than on other countries and still appears to be trying to rally other countries to introduce restrictions of their own on trade with China. In these circumstances, there is no guarantee that the 90-day truce will give way to a lasting ceasefire. Talk of “trade deals” has helped undo the damage from Donald Trump’s Liberation Day, reports Dario Perkins, economist at TS Lombard. The ever-quotable Perkins gives credit to Treasury secretary Bessent, saying: Equities have bounced even with tariffs much higher than at the start of the year, and with massive uncertainty about what the next six months will bring. It helps that Scott Bessent has become the main spokesman for Trump 2.0. He has a real talent for sanewashing policies to make them look intellectually coherent and “market friendly”. “Markets have welcomed the tentative US-China trade agreement with open arms,” says Russ Mould, investment director at AJ Bell. “While the trade spat has only been dialled back for 90 days, it’s a major breakthrough as far as investors are concerned. The fact the two countries were talking was already a major win given they’ve been at each other’s throats during the first and second Trump presidential terms. “Some people thought the best-case outcome from the weekend’s discussions would be an agreement to simply keep talks going. Therefore, to have reached an initial deal so quickly and one that rolls back tariffs by a large amount is a pleasant surprise. “The UK-US trade deal last week made it perfectly clear that Trump wasn’t going to get rid of tariffs completely. If one of its greatest allies is forced to still have a 10% base tariff, there is no way that tariffs on China would have disappeared completely upon a trade deal. “Lowering tariffs on Chinese goods from 145% to 30% is a big deal and one that significantly lessens the blow to the Asian economy. As ever, it’s clear that these deals aren’t even sided. China is cutting duties on US imports from 125% to 10%. That’s the same percentage point reduction as on the other side of the coin, but the US is still subject to lower tariffs. “The next 90 days are going to be crucial in determining the longer-term tariff levels between the two countries. It would only take China upsetting Trump once for him to rip up the 90-day deal and revert back to sky-high tariffs. China won’t want to come across as weak in any discussion and is certainly not a push-over, yet it will be cognisant of the situation’s fragility. China and the US have agreed a 90-day pause to the deepening trade war that has threatened to upend the global economy, with reciprocal tariffs to be lowered by 115 percentage points. Speaking to the media after talks in Geneva, the US treasury secretary, Scott Bessent, said both sides had shown “great respect” in the negotiations, my colleague Amy Hawkins writes. Bessent said: “The consensus from both delegations this weekend was neither side wants a decoupling”. More here: A spokesperson for China’s ministry of commerce has said today: “This move meets the expectations of producers and consumers in both countries, as well as the interests of both nations and the common interest of the world. “We hope that the US side will, based on this meeting, continue to move forward in the same direction with China, completely correct the erroneous practice of unilateral tariff hikes, and continually strengthen mutually beneficial cooperation.” Donald Trump has ‘blinked’ in his trade war with China, says Bill Blain, market strategist at Wind Shift Capital. Blain dubs today’s agreement for the US and China to cut their tariffs to just 10% is a “classic bully story”, saying: Bully hits someone. Someone hits back. Bully stands down. Blain explains that Treasury secretary Scott Bessent has stepped the USA back from the brink of a trade conflict with China which it would have lost, telling clients: This morning’s step down will confirm the growing global realisation Trump is a dog that barks, but only bites much smaller dogs. He threatens, he postures, he steps back from the fight every time. His repeated climb downs, and his now increasingly desperate need to be seen to be doing deals, means fewer and fewer folk are scared by him. It also raises the fundamental issue – the USA can’t afford a trade war. The USA is indebted to the tune of $36 trillion. Trump is promising the big beautiful bill to cut taxes. But as DOGE’s failure showed, he can’t cut spending. Blain reckons the US may just have averted a catastrophic trade induced crash, but could still suffer a “stagflationary shock”, as the trade war will have just growth and push up prices. More here. The oil price has pushed higher too. US crude is up 2.2%, while benchmark Brent crude is 2% higher at $65.25/barrel, the highest in around two weeks. That suggests fears of a protracted trade war, hurting global growth, are easing. The agreement to cut tariffs between the US and China is better than hoped, reports Neil Wilson, UK investor strategist at Saxo Markets. Stocks are soaring on Monday as the US and China have struck a trade deal after productive talks in Switzerland. We’d heard overnight that the two countries had made “substantial progress” on trade talks, which helped lift the mood but seemed fairly innocuous. This morning we got a bit of a surprise and a jolt higher as the de-escalation seemed better than just about anyone could hope for. There are some other measures still in place, but basically the US will cut tariffs on Chinese goods to 30% from 145% for 90 days, while China will lower its tariffs on US goods to 10% from 125% for 90 days. This is buying time for a more comprehensive deal – allows for time for the process and ‘mechanism’ in the words of Treasury Secretary Bessent to take place. But he also stressed that strategic rebalancing of the global economy is still underway, although “neither side want a decoupling”, which is the sort of commentary the market is going to lap up. But it is not true – the US is absolutely trying to decouple. The dollar has rallied strongly after the US and China agreed to steep reductions in tariffs for the next 90 days. The dollar index, which measures the greenback against a basket of currencies, has jumped by 1.2% today. The pound has dropped by 1.3 cents, to a four-week low of $1.317. The euro has lost almost a cent and a half, down to $1.11. Here are a few photos from this morning’s briefing in Geneva, with Jamieson Greer and Scott Bessent Stock markets across Europe are rallying strongly, as investors hail the news that the US and China have agreed a 90-day pause to their trade war. Germany’s DAX index has jumped by 1.5%, amid optimism that the trade war is cooling. Automakers are among the top risers in Frankfurt, with Mercedes-Benz (+5.5%), Daimler Trucks (+5.5%) and BMW (+5.4%) all gaining. France’s CAC index has risen by 1.2%. There is general relief that tariffs are being cut between the US and China, at least for the 90-day window of opportunity. Ahmad Assiri, research strategist at brokerage Pepperstone, says: Economically, this step back in tariffs is not a structural fix or a comprehensive deal. But it signals a change in tone or at the very least a political willingness to pause. Under the surface, this move seems more like an effort to buy time. It may help pave the way for more serious talks over the coming three months. Markets read this as a sign that progress is possible. Not guaranteed, and not permanent, but at least it’s a step forward. London’s market is lagging, though, with the FTSE 100 index only up 10 points, or 0.03%. Mining stocks are jumping in London, such as Glencore (+6.3%), and Anglo American (6.2%). But, the market is being dragged back by AstraZeneca (-4%), after Donald Trump promised to use his executive powers to cut the price of prescription drugs in America. Weapons maker BAE Systems (-3.5%) has also dropped, after European leaders called for unconditional 30-day ceasefire in Ukraine. The White House has released a joint statement outlining the agreement reached at the US-China economic and trade meeting in Geneva. It confirms that the two sides are both cutting the reciprocal tariffs on each others goods by 115 percentage points, and are “moving forward in the spirit of mutual opening, continued communication, cooperation, and mutual respect”. Scott Bessent and Jamieson Greer also have warm words for the way the Swiss government looked after them during their weekend of negotiations in Geneva. Bessent says Switzerland, like the UK, have “moved to the front of the queue” for a trade deal (a nod to the agreement announced between Washington and London last week). The EU, though, has been “much slower”, he adds. Greer explains that the Swiss opened up the grounds of the residence of the Swiss ambassador to the United Nations fro the talks, and that “most important discussion on the most challenging issues” took place “under a large, beautiful tree on a set of patio sofas”. US trade anbassador Jamieson Greer also outlined why the Trump administration was determined to reshape global trade. Greer says the US spent decades at the World Trade Organization, and holding multilateral and bilateral negotiations, trying to get other countries to reduce their tariffs and non-tariff barriers, and to agree more reciprocal trade with the US. The promise of the WTO and the multilateral system is that everyone’s tariffs were going to come down, Greer tells reporters in Geneva, adding: It turned out, the US went down significantly. There were other economies that had low tariffs as well, but retained very high non-tariff barriers. We have tried really hard to work within the system. And the net result [is] the $1.2 trillion deficit in goods, the net result is manufacturing went to China, East Asia, Mexico, etc. As such, it’s not realistic to sugges the US should just have kept talking, he adds. The US side also suggest that they have agreed a “very good mechanism” to avoid unfortunate escalations with China over trade in future. Asked about the details of the new tariffs between the US and China, trade ambassador Jamieson Greer explains that today’s agreement is based on the reciprocal tariff which was imposed by the United States on 2 April, and the escalatory steps which followed by each side. He says the Chinese side and the US side ended up at 125% on each other’s imports. “That has all come down by 115% to 10% each”, Greer says (in the 90-day pause announced this morning). In addition, the US imposed 20% related to fentanyl, Greer points out (which is why the US total tariff level was reported at 145%). That levy, imposed by Donald Trump to encourage China to reduce the flow of fentanyl into the US, is on its own track. So, the US reciprocal tariff on imports from China is dropping to 30% under the deal agreed last weekend, while China’s levy drops to 10%. However, there are also “sector-specific” tariffs which the US charges on imports of, for example, steel and cars. Scott Bessent reveals that “the upside surprise for me from this weekend” was the level of Chinese engagement on the fentanyl crisis in the US. Bessent also suggests there is a possibility of agreeing purchase agreements with China, that could help lift the US trade deficit with China “into balance”. Scott Bessent says there was a consensus from both the US and China delegations at last weekend’s talks that “neither side wants a decoupling”. Bessent adds that the US wants more balanced trade; he thinks both sides are committed to achieving that. Newsflash: the US and China have agreed to lower tariffs on each other’s goods substantially for 90 days, following their negotiations last weekend. Speaking in Geneva, treasury secretary Scott Bessent says that “both sides will move their tariffs down by 115%”, having agreed a 90-day pause. That’s a significant de-escalation in the trade war that blew up last month. Before today, the US had lifted its tariff on China to 145% (including the 20% tariff added to tackle fentanyl imports into the US), with Beijing having retaliated with 125% tariffs on US imports. Bessent tells reporters that “both sides showed great respect” during their talks, and that “we both have an interest in balanced trade”. Treasury secretary Scott Bessent and US trade representative Jamieson Greer are about to hold a press briefing now in Geneva, to discuss last weekend’s talks with China…. Iron ore prices have risen too, after the US and China reported progress in their trade talks. The benchmark June iron ore contract on the Singapore Exchange is up 2.2%, to around $99 per tonne. The most-traded September iron ore contract on China’s Dalian Commodity Exchange was up 1.5% earlier this morning, Reuters reports. There are reports that US treasury secretary Scott Bessent will hold a briefing on the trade talks within the hour, in Geneva. Oil, a gauge of global growth prospects, has risen more than 1% today after the US and China both touted progress at their trade talks. Brent crude, the international benchmark, has risen by 80 cents per barrel to $64.75/barrel, the highest level since 29 April. China’s trade representative, vice commerce minister Li Chenggang, told reporters that what was agreed at the weekend of talks with the US in Geneva will be worth the wait. Li explained: “As we say back in China, if the dishes are delicious, the timing doesn’t matter,” “Whenever it gets released, it will be good news for the world.” Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. A sigh of relief is sweeping global markets today, after the US and China both reported they made progress at a weekend of talks in Switzerland over the trade war. Stocks have risen across Asia-Pacific markets, while safe-haven asset gold has dipped, on hopes of de-escalation in the trade war gripping the global economy. The two sides have promised to release details about what was agreed later today, after both issuing encouraging statements on Sunday after the talks wrapped up. Last night, the White House announced a “China Trade Deal” had been reached in Geneva. Treasury secretary Scott Bessent described the talks as ‘productive’, saying yesterday: “I’m happy to report that we made substantial progress between the United States and China in the very important trade talks. First, I want to thank our Swiss host. The Swiss government has been very kind in providing us this wonderful venue, and I think that led to a great deal of productivity we’ve seen. We will be giving details tomorrow, but I can tell you that the talks were productive. US trade representative ambassador Jamieson Greer said it was a “very constructive two days” of talks, adding that “perhaps the differences were not so large as maybe thought”. For Beijing, Vice Premier He Lifeng said the China-U.S. high-level meeting on economic and trade affairs were “in-depth, candid and constructive”. He explained that the two countries have agreed to a new “trade consultation mechanism”. That “mechanism” suggests a warming in relations between the two sides, who ratcheted up tariffs on each other’s goods last month, after Donald Trump announced his ‘“Liberation Day” levies on imports to the US. Markets have responded positively, even though neither side has yet released any specific details of possible points of agreement. China’s CSI300 share index has risen 0.8%, while Hong Kong’s Hang Seng index is up 1.2%. Japan’s Nikkei has risen a more modest 0.3%. The futures market suggests the US markets will rally later today too. Kyle Rodda, senior financial market analyst at capital.com, says: It remains the case that there’s more style than substance when it comes to the trade policy narrative: not as much as a pledge to lower tariffs has been given, let alone a substantive and comprehensive deal. Nevertheless, what the US is touting as “productive” talks and Trump has labelled a “reset” is a clear statement of intent from the US to wind back existing tariffs. The markets and negotiators are on the clock now to reach an agreement before the damage of existing tariffs begin to seriously weaken economic activity, especially in the US. So far, tariffs have had a negative but relatively modest impact on economic growth, with the labour market proving resilient and prices stable. Eventually, if the status quo remains, the levee will break and significant and hard to reverse damage will be done to the global economy. We’ll hear from top central bankers in the UK today, as King’s College London hosts the annual Bank of England Watchers’ conference. The agenda 9:00am BST: Bank of England deputy governor Clare Lombardelli gives keynote speech at the Bank of England Watchers’ Conference 2025 11:30am BST: Panel on the Monetary policy outlook including BoE policymaker Megan Greene 17:00pm BST: Fire-side chat with BoE policymaker Alan Taylor
Author: Graeme Wearden