Stock Markets in Asia exhibit modest gains during low-volume holiday trading
Headline: U.S.-China Tariff Truce Maintains Stability While Affecting Global Economy
The S&P/ASX 200 Index rose 0.4 percent to 8,844.80, as Australian markets saw modest gains amid expectations of the Reserve Bank of Australia easing policy on Tuesday. Meanwhile, the U.S.-China tariff truce, extended until November 10, 2025, has brought a temporary pause to increased tariffs, currently at around 30 percent.
This truce aims to provide short-term stability for businesses, especially during crucial trade seasons, and to allow more time for negotiations between the two countries. However, the ongoing tariffs continue to distort trade flows, contribute to cost inflation and uncertainty, and slow down global economic recovery dynamics.
The tariffs currently cover 100% of Chinese imports, with an average U.S. tariff rate on Chinese exports standing at 51.1%. China’s average tariffs on U.S. exports are around 32.6%. These tariffs have risen significantly since early 2025 amid increases by the Trump administration, including sector-specific tariffs under various trade acts like Section 301, 232, and 201.
The economic impact is mixed. On one hand, Treasury Secretary Scott Bessent stated that the current tariff setup is "working pretty well" and revenues from tariffs help soften U.S. fiscal pressures from recent tax cuts. On the other hand, certain U.S. industries like soybean farmers face severe hardship due to retaliatory tariffs and lost exports to China, putting them at a "trade and financial precipice." China has not bought American soybeans from the upcoming harvest as of summer 2025, exacerbating these difficulties.
The U.S. administration is also increasing scrutiny on materials like steel, copper, and lithium imports from China to enforce bans on goods made with forced labor, intensifying trade tensions but aligning with broader goals to reduce the trade deficit and curb harmful exports like fentanyl precursors.
As the deadline for a deal between the U.S. and China approaches on August 12, investors are looking ahead to a slew of U.S. and Chinese economic data and the Trump-Putin meeting on August 15 in Alaska for directional cues. Meanwhile, the tech-heavy Nasdaq Composite climbed 1 percent to reach a new record closing high for a second day, and Apple committed to invest an additional $100 billion in U.S. manufacturing.
However, the ongoing tariff standoff continues to affect global economic growth, with China’s factory-gate prices falling more than expected in July, while consumer prices were flat. The mixed economic outlook, coupled with the ongoing trade tensions, is causing concern for many industries and economies around the world.
References:
- CNN Business
- The Wall Street Journal
- The New York Times
- The Economist
- Bloomberg
- The ongoing tariff standoff between the U.S. and China, affecting global economic recovery dynamics, prompts investors to explore opportunities in industries less impacted, such as technology and finance, for potential long-term investments.
- Amid the tariff-induced uncertainties, tech companies like Apple are increasing their investment in U.S. manufacturing, viewing it as a strategic move to ensure supply chain stability while also contributing to domestic economic growth.
