Key Takeaways
- US President Donald Trump has extended the 90-day suspension of higher tariffs on China, pushing the deadline to early November and easing immediate trade tensions.
- Despite the truce extension, China will maintain measures to suspend or remove non-tariff actions against the US and will retain an additional 10% tariff rate on certain US imports.
- Japanese equities surged, with the TOPIX hitting a record high and the Nikkei 225 reaching its highest level since July 2024, buoyed by easing tariff worries and strong corporate earnings.
- Singapore has raised its 2025 growth forecast to 1.5%-2.5% from an earlier 0%-2% range, following a 4.4% year-over-year GDP rise in the second quarter.
- Oil prices held near a two-month low, with WTI at $64.11 a barrel and Brent at $66.63, as the extended tariff pause alleviated some market concerns.
Global financial markets are reacting to the latest developments in US-China trade relations, with US President Donald Trump extending the 90-day pause on higher tariffs against China until early November. This decision, signed via an executive order on August 11, prevents tariffs on Chinese goods from reverting to peak levels of up to 145% and Chinese tariffs on US goods from hitting 125%, which would have effectively created a trade embargo. The extension aims to provide more time for the two nations to finalize a comprehensive trade deal.
However, a joint statement from the China-US Economic and Trade Meeting in Stockholm indicates that while the US will continue to suspend 24 percentage points of its additional tariff rate on Chinese goods, it will retain a 10% ad valorem rate. Similarly, China will also retain an additional 10% tariff rate on US imports and will maintain all necessary administrative measures to suspend or remove non-tariff countermeasures against the US. This reflects a continued, albeit de-escalated, state of trade friction. Currently, imports from China are subject to a 30% tariff, including a 10% base rate and a 20% fentanyl-related tariff.
The easing of trade tensions has had a noticeable impact on commodity markets, with oil prices holding near a two-month low. West Texas Intermediate (WTI) traded at $64.11 a barrel, while Brent closed at $66.63, with prices pressured by an ongoing global surplus after OPEC+ reversed 2023 supply cuts.
In Asian markets, Japanese equities soared, with the TOPIX index closing at a record high of 2,987.92 and the Nikkei 225 climbing to 41,059.15, its highest level since July 2024. This rally was attributed to easing concerns over US tariffs and increased investor optimism regarding the strong performance of domestic firms. Companies like Sony Group (SONY) saw significant jumps after raising their full-year operating profit forecasts, while financial institutions such as Mitsubishi UFJ Financial Group (MUFG) and Sumitomo Mitsui Financial Group (SMFG) also gained. Meanwhile, Japan's M2 Money Stock for July rose by 1.0% year-over-year, following a 0.9% increase in the previous month, and M3 Money Stock increased by 0.6%.
Singapore's economy showed robust performance, with its final second-quarter GDP rising 4.4% year-over-year, in line with estimates and extending the 4.1% growth from the previous quarter. This better-than-expected performance has led Singapore to raise its 2025 growth forecast to a range of 1.5%-2.5% from an earlier projection of 0%-2%. The Ministry of Trade and Industry noted that the improved outlook takes into account better first-half performance, where the impact of the trade war was less severe than anticipated.
Separately, the Trump administration has reached an unusual agreement with US semiconductor giants Nvidia (NVDA) and Advanced Micro Devices (AMD), requiring them to pay the US government 15% of their revenue from certain AI chip sales to China in exchange for export licenses. This deal, confirmed by President Trump, has raised concerns among experts and lawmakers regarding potential corporate and national security risks.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.