What is the current status of the US-China trade truce negotiations, and how might the outcome affect global markets?

The current status of the US-China trade truce negotiations is that both sides have agreed to extend the tariff truce for another 90 days, signaling a temporary stabilization in trade relations. This extension allows time for further negotiations and potentially sets the stage for indirect forms of negotiation through strengthening partnerships with third countries. The fragile nature of this truce underscores the need for continued dialogue and cooperation to address deeper structural issues in their trade relationship. ### Impact on Global Markets 1. **Stabilization of Supply Chains**: The truce has provided a temporary relief from supply chain disruptions, allowing companies in sectors like semiconductors and electronics to stabilize their procurement strategies. 2. **Market Volatility Reduction**: The reduction in tariffs has led to lower volatility in industrial commodities such as steel and aluminum, and has stabilized prices in sectors like soybeans and pork, which were affected by China's record purchases of U.S. agricultural products. 3. **Tech Sector Relief**: The truce has been particularly beneficial for tech firms, easing pressure on companies like Nvidia and TSMC that rely on cross-border trade. 4. **Economic Outlook Improvement**: The IMF has boosted its outlook for China's economic growth to 4.8% in 2025, partly due to the lower levies and stronger-than-expected economic activity in the first half of the year. 5. **Ongoing Risks and Uncertainties**: Despite the truce, long-term risks and uncertainties persist. The agreement expires in August 2025, and if no further negotiations are successful, tariffs could revert to much higher levels, potentially disrupting global trade and markets. In conclusion, while the US-China trade truce has provided a window of opportunity for global markets to stabilize and recover, it is not a guarantee of long-term stability. Ongoing negotiations and the eventual outcome of these talks will significantly impact global trade patterns and market volatility.