Global Markets Adapt to U.S.-China Tariff Truce as Fed Rate Cut Expectations Rise
U.S. and Japanese equities hit record highs amid evolving reactions to President Trump's trade policies. The temporary tariff truce with China has been extended by 90 days, maintaining average U.S. tariffs on Chinese goods at approximately 55%. Markets now price in a 92% probability of a 25-basis-point Fed rate cut by September.
New reciprocal tariffs on multiple trade partners were announced last week, with upcoming negotiations involving Canada, Mexico, and China drawing particular attention. Despite billions in tariff revenue, inflationary pressures remain contained—a development that bolsters risk assets across markets.