The US and China reached a 90-day trade truce. Now begins the race to import stuff.

The US and China agreed to suspend astir tariffs connected each other's goods for 90 days, pursuing high-stakes negotiations successful Geneva implicit the weekend.

As the tariff intermission begins connected Wednesday, experts expect a spike successful commercialized betwixt the countries, arsenic companies contention to front-load inventory portion negotiators enactment connected a deal.

"The negotiations suggest that some countries recognize they request each other," Andrew Collier, a elder chap astatine the Mossavar-Rahmani Center for Business and Government of the Harvard Kennedy School, told Business Insider.

The impermanent truce slashes China's tariffs connected the US from 125% to 10% and the US's tariffs connected China from 145% to 30%. The woody leaves President Donald Trump's fentanyl-related 20% tariffs successful spot and does not reconstruct the de minimis exemption, which applied to e-commerce from China and allowed Temu and Shein orders to stay duty-free.

Following the agreement, stocks rallied sharply connected Monday, particularly for tech. The Nasdaq Composite and the S&P 500 each surged astir 3%, portion the Dow Jones Industrial Average jumped much than 2.4% and gained implicit 1,000 points.

A spike successful US-China trade

As businesses unreserved to get shipments crossed the Pacific portion tariffs are lower, Scott Kennedy, elder advisor successful Chinese concern and economics astatine the Center for Strategic and International Studies, told Business Insider that helium expects US-China commercialized to velocity up during the 90-day negotiation.

"US-China commercialized should bounce back," said Kennedy. "We whitethorn spot a important leap successful cargo for companies that are disquieted that we volition beryllium backmost astatine this intersection successful a fewer months, and they request to instrumentality vantage of this respite to grow to accelerate trade."

Chinese exports to the US spiked 15.6% successful December 2024 compared to the aforesaid period successful 2023 arsenic businesses frontloaded inventory successful anticipation of tariffs erstwhile President Donald Trump was inaugurated.

"Our water freight bookings from China to US accrued 35% successful the archetypal time since the commercialized deal," Flexport CEO Ryan Petersen posted connected X connected Monday. "A large backlog is looming, soon the ships volition beryllium sold out."

However, smaller businesses person antecedently told BI that they person cash travel constraints erstwhile ordering and storing a ample measurement of products. Increased request for cargo shipping wrong a abbreviated clip framework whitethorn besides thrust up shipping costs.

At the extremity of the 90 days, commercialized experts expect the result of negotiations to beryllium wide and substantial, but judge determination volition beryllium immoderate thorny issues that can't beryllium resolved quickly.

Kennedy of CSIS is expecting the US to absorption connected China's concern policy, fentanyl, and intelligence spot theft, portion China would apt effort to resoluteness US export controls, restrictions connected investment, and the fees that are scheduled to beryllium imposed connected Chinese ships by October.

"With an highly wide agenda, and the situation volition beryllium narrowing that docket toward thing that looks similar imaginable concessions by some sides," said Kennedy.

Collier told BI that leaders of some countries are nether antithetic kinds of pressures to seal the deal.

"How the US volition past effort to tackle the knotty contented of state subsidies and China's assertive mercantilism volition person to hold for different chapter," helium said.

Cautious optimism

While the stock marketplace reacted to the US-China tariff intermission with optimism, Federal Reserve Board Governor Adriana Kugler said that wide tariffs astatine their new level are inactive higher than they person been successful caller decades. She said successful a code connected Monday that this could inactive pb to a antagonistic proviso daze and a compression connected existent income.

"And the uncertainty associated with these tariffs has already generated effects connected the system done front-loading, sentiment, and expectations," Kugler said.

Kugler expects economical maturation to travel abbreviated of past year's 2.5% expansion, adjacent though recession forecasts are sliding successful betting markets arsenic US-China hostility cools. Progress made successful combatting ostentation has besides slowed, she said, and ostentation is inactive supra the 2% goal.

"Trade policies are evolving and are apt to proceed shifting," she added. "Even arsenic precocious arsenic this morning."