Asian stocks acquired on Monday of the weekend’s negotiations showed progress in easing trade tensions between the United States and China.
Benchmark indexes in Japan and South Korea rose in trading early Monday morning. Stocks in Hong Kong and Shenzhen, China climbed about 1%, while futures pointed out that S&P 500 stocks had similar gains when trading in New York.
The meeting in Geneva between U.S. and Chinese officials ended on Sunday with U.S. Treasury Secretary Scott Bessent, saying “substantial progress” had been made. China’s vice premier, lifefeng, said the talks were “frank, in-depth and constructive.” The two sides said details are expected to be released on Monday.
The meeting was the first between Washington and Beijing since President Trump raised tariffs on Chinese imports to 145%, with China retaliating against a 125% tax on U.S. goods. The tariffs are so high that they effectively block most of the trade between the two countries.
As the trade war escalates the financial markets, the meeting raised the hopes of investors to ultimately lower tariffs.
Analysts at financial services firm Wedbush Securities said the negotiations were “a positive step in the right direction”. They expect the preliminary agreement unveiled during Monday’s U.S. Festival will “at least” involve “lower levels” of tariffs.
Economists warn that Tit-for-Tat trade barriers have greatly increased the possibility of an economic downturn. Among them are some of the largest economies in Asia, including Japan and South Korea, which are trading partners in China and the United States.
The World Trade Organization predicts that in the long run, the continued division of the global economy into “competitors” could lead to nearly 7% of global GDP. Earlier this month, Japanese officials cut their growth this year by more than half.
Last week, China reported that its exports to the U.S. in April fell 21% from a year ago. Recession warnings began to appear in the United States.
Entering the weekend, investors have relatively low expectations for a breakthrough in negotiations, which will lead to lower tariffs. Many analysts expect discussions to revolve around determining what both sides want and how negotiations can move forward.
Recently, Mr. Trump has opened the door to lower tariffs. Last week, he suggested that tariffs could drop to 80%. Commerce Secretary Howard Lutnick told Fox News that the so-called mutual tariffs on trade with China could be reduced by 34%.
