12.05.25 - 90-days deal

The US and China have agreed to slash reciprocal tariffs from 125% to 10% for a period of 90 days, marking a major breakthrough in trade negotiations. The agreement was reached after high-level talks in Switzerland over the weekend. However, the US will maintain its separate 20% tariff on Chinese fentanyl-related imports, leaving China with an effective total tariff burden of 30%.

Markets: Markets responded with a euphoric move; US interest rates climbed alongside the US dollar, while gold took a hit and crypto prices fell sharply

My view: This deal came together surprisingly quickly after latest confrontation and is a step in the right direction, but it is far from a final resolution. The 90-day truce is temporary, and underlying structural issues remain unresolved. Policies have already changed several times and could shift again just as fast. Despite the market’s euphoric reaction, I see no reason yet to shift into a risk-on stance. Corporates have already taken damage amid prolonged uncertainty. Markets have already rebounded strongly, even surpassing pre-Liberation Day levels. I continue to follow developments closely and will reassess positioning as the situation evolves.

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