Shares soar as China and U.S. slash tariffs: Trump hails his ‘whole reset’ with Beijing – and turns his ire on EU

Trade talks: US President Trump said he plans to speak to Chinese president Xi Jinping ‘maybe at the end of the week’ 

Global stock markets rallied yesterday as the US and China agreed to slash tariffs for 90 days in a major de-escalation of a trade war that threatened to plunge the world into recession.

In what Donald Trump described as ‘a total reset’ in relations with Beijing, the US will cut extra import duties on Chinese goods from 145 per cent to 30 per cent. The levy on those going the other way will fall from 125 per cent to 10 per cent.

The agreement between the world’s two biggest economies – almost six weeks after Trump unleashed a tsunami of tariffs on the world on what he described as ‘Liberation Day’ – sent stock markets and the dollar soaring.

Oil also made gains as fears of recession faded while gold tumbled, having hit record highs in recent weeks as investors fretted about the outlook.

John Praveen, managing director at asset manager Paleo Leon in New Jersey in the US, said: ‘This is a relief rally that the worst-case scenario in tariffs is not likely to materialise.

‘We may not get zero tariffs, but the worst case is unlikely. We’ve pulled back from the brink.’

Trade talks: US President Donald Trump said he plans to speak to Chinese president Xi Jinping ‘maybe at the end of the week’

Trump said he plans to speak to Chinese president Xi Jinping ‘maybe at the end of the week’ and added: ‘We’re not looking to hurt China.’

The deal between Beijing and Washington came days after an agreement between the UK and US saw Trump slash tariffs on British cars, steel and aluminium.

But in comments that will give investors pause for thought, the President took aim at the

European Union and global pharmaceutical companies over the price Americans pay for drugs. He said: ‘The European Union is in many ways nastier than China.’

That failed to dampen the mood on the markets, however, and the FTSE 100 rose 0.6 per cent, or 50.18 points, to 8604.98.

The blue-chip Footsie is now up 5.3 per cent this year and is just a whisker below the closing price of 8635 the day before Trump launched his trade war at the start of April.

On the Continent, the Dax hit a record high in Frankfurt and the Cac gained more than 1pc in Paris. The gains were even stronger on Wall Street. 

The technology-focused Nasdaq rose nearly 4 per cent, the Dow Jones Industrial Average gained 2.7 per cent and the S&P 500 rose more than 3 per cent. 

Having retreated sharply in recent weeks on fears of US recession, the dollar clawed back losses against currencies – including the pound and euro.

Sterling fell as much as 1.2 per cent against the greenback, from above $1.33 to a low of $1.3140.

Oil jumped more than 3 per cent, with Brent crude rising from below $64 a barrel to above $66 a barrel, on hopes that a reduction in tariffs will boost the economy and in turn raise demand for raw materials. Gold fell towards $3,200 an ounce having hit a record high of $3,500 last month.

Chris Turner, an analyst at ING, said: ‘These were earlier and larger concessions on tariffs than the market had been expecting. 

Certainly, it’s an important step in terms of de-escalation, but it’s too early to say the trade war is ending.’