The moratorium on US-China tariffs, announced on Monday, May 12, was greeted with a huge celebration on Wall Street. The S&P 500 ended the day up 3.26%, while the tech-heavy Nasdaq soared by 4.35%. Wall Street completely erased the impact of Donald Trump's tariff announcements from April 2 and is now back to levels close to those at the beginning of the year.

The relief felt by the markets goes far beyond the mere issue of trade barriers. The world's two largest economies moved from a strategy of complete separation – prohibitive tariffs of 145% were tantamount to eliminating trade between them – to one of high, yet traditional, tariffs. These remain higher than ever, with taxes of 30% imposed on China and 10% on the Uited States, but several scenarios have been ruled out by this truce signed in Geneva.

First and foremost is the possibility of a repeat of the Covid-19 crisis, when global production chains were disrupted by the inability to keep factories running. The US, in turn, avoids a resurgence of persistent inflation, comparable to what they experienced starting in 2021, although a price increase is not out of the question.

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