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The United States and China have reached an agreement to temporarily cut reciprocal tariffs, offering a hopeful pause in the prolonged trade conflict that has rattled global financial markets and raised concerns of a potential recession.
The tariff standoff had brought nearly $600 billion in bilateral trade to a halt, as quoted on Reuters. However, the latest diplomatic progress offered a reprieve.
90-Day Truce to Slash Tariffs
Following high-level negotiations in Geneva, U.S. Treasury Secretary Scott Bessent announced that both nations had consented to a 90-day suspension of escalating tariff measures. As part of the deal, tariffs on both sides will be cut by over 100 percentage points, returning to a baseline rate of 10%.
Market Response and Optimism
Financial markets reacted positively to the news. The dollar strengthened against major currencies, and Wall Street stock futures climbed, as investors became more optimistic that the risk of a global recession might be easing.
Talks Mark First High-Level Meeting Since Tariff Escalation
This Geneva meeting marked the first face-to-face engagement between senior economic officials from both countries since President Donald Trump resumed office and reignited tariff tensions. Trump had significantly increased tariffs on Chinese goods to 145% since January, while China responded by raising its tariffs to 125% and restricting rare earth exports vital to U.S. industries.
ETF Strategies to Follow
Against this backdrop, below we highlight a few exchange-traded fund (ETF) investing strategies that is likely to help investors’ portfolios.
Bet on Tech Socks
Tech and chip stocks surged Monday after the United States and China agreed to pause most tariffs. The tech-heavy U.S. stock index is on its way for its best trading day in more than a month. Apple and Amazon, both heavily exposed to China, jumped over 6% and 8% respectively.
Apple makes 90% of its iPhones in China. Apple recently warned tariffs could add $900 million to quarterly costs. Many sellers on Amazon rely on Chinese products.
Chipmakers like NVIDIA and TSMC also rallied, while Chinese tech names including Alibaba, JD.com, and Baidu saw strong gains.
So, bet on ETFs like The Technology Select Sector SPDR Fund XLK, VanEck Semiconductor ETF SMH and The Consumer Discretionary Select Sector SPDR Fund XLY.
Bet on Consumption as Global Growth Worries Ease
Oil, base metals, and agricultural commodities rallied after China and the U.S. agreed to lower tariffs on each other, as concerns over global growth have eased. Recent trade deals — both permanent and temporary — negotiated by the United States are expected to boost global demand for commodities, including soft, hard, and liquid assets.