The bank views the truce as a “positive near-term catalyst for risk assets,” particularly for sectors with high exposure to cross-border supply chains, such as consumer electronics and technology. The reprieve also supports its base case that the US will avoid recession this year.
A sharp and unexpected de-escalation in US-China trade tensions is expected to lift near-term risk sentiment, according to a May 13 report from the Bank of Singapore (BoS). The research notes that the scale and speed of the tariff rollback — announced after bilateral talks in Geneva — went further than most in the market had anticipated.
Under the agreement, both countries will reduce tariffs to a 10% universal baseline for a 90-day period, during which trade talks will continue. The US will cut its Trump 2.0 tariffs from 145% to 30%, keeping only the 20% fentanyl-related levy and a 10% baseline rate. China will match by lowering its retaliatory tariffs from 125% to 10%.
