U.S. and China Agree to Slash Tariffs, Boosting Risk Appetite

Introduction

The U.S. and China have agreed to ease trade restrictions by temporarily lifting the majority of tariffs on each other’s goods, signalling a cooling of economic tensions. Following talks in Geneva, U.S. Treasury Secretary Scott Bessent announced a 90-day freeze on new duties and a significant reciprocal tariff cut of 115%.

Reciprocal tariffs now stand at 30% and 10% respectively. However, tariffs related to fentanyl and certain other measures remain in place.

Furthermore, the U.S. and China have agreed to "establish a mechanism to continue discussions about economic and trade relations."

Risk markets have generally responded positively to the news. Tradu’s SPX500 contract is up 2.73% in pre-market trade, while the NAS100 has surged more than 3.5% as sentiment turns decisively risk-on.

SPX500/NAS100 - Outlook Has Shifted Positive

Source: www.tradingview.com

Both the SP500 and NAS100 have developed constructive longer-term weekly charts. Their respective 5-week EMAs have just crossed above their 10-week EMAs, with RSIs reflecting positive momentum, climbing above the 50 mark. Markets have made notable progress since bottoming in early April, following the announcement of reciprocal tariffs on “Liberation Day” (2 April). That dip has, in hindsight, presented a compelling buying opportunity.

Gold Price Pulls Back

Source: www.tradingview.com

Interestingly, gold—a traditional safe-haven asset—has dropped by a notable 3.15%. Its daily technical setup has deteriorated, with EMAs forming a bearish alignment and the RSI falling below 50. Whether this negative momentum persists remains uncertain, though there is some support near the $3,200 level.

Currency Moves Prove Positive For The Dollar

Source: www.tradingview.com

On the currency front, the greenback has surged sharply, with Tradu’s USDOLLAR basket jumping in response to the developments out of Geneva. The daily chart shows a bullish EMA formation, while the RSI has moved above 50—indicating underlying positive momentum that continues to support the dollar. The next level of resistance is around the 12,950 mark.

EURUSD On Track For Worst Day This Year

Source: www.tradingview.com

The EURUSD has dropped by over 1%, setting up for its worst single-day performance so far this year. The technical outlook has deteriorated, with the 5-day EMA slipping below the 10-day EMA and the RSI falling decisively under 50—both signalling mounting negative momentum. The next notable support level is at 1.0960, around 1.5% below current levels.

AMZN Popped Following Slashing of Tariffs

Source: www.tradingview.com

AMZN shares have surged more than 7.5% in pre-market trade following the announcement of tariff cuts. Technically, the stock appears robust, with EMAs in a bullish formation and the RSI comfortably above 50—both pointing to strong underlying momentum. This positive reaction is hardly surprising. Prior to the announcement, there were growing concerns over the U.S.–China trade war. Reports indicated that some third-party merchants dealing in Chinese imports had either significantly reduced their listings or chosen to withdraw from trading altogether. With the deadline to opt into Prime Day falling on 23 May, the timing of this announcement comes as a relief to these sellers. A pullback in offerings would likely have resulted in reduced fees for Amazon and lower advertising revenue.

Conclusion

The tariff rollback—much larger than markets expected—signals a major shift in U.S.–China trade relations. Cutting reciprocal tariffs from 125% to 10%, and 145% to 30%, shows both sides are choosing economic stability over rising tensions. While some duties, such as those on fentanyl-related goods, remain, the overall message is clear: talks are back on. The 90-day pause may be short, but it gives fresh momentum to negotiations. For now, investors are cheering the move, with risk assets and the dollar all reacting positively. Whether this leads to a lasting deal is uncertain, but the tone has clearly changed—and that’s already a win for markets.