US-China deal: What do experts say about the 'soft landing scenario'?

However, behind the initial excitement of investors, experts and analysts are expressing different views. The question is whether this move is enough to resolve the long-standing trade tensions, opening up a "soft landing scenario" for the world economy, or is it just a brief lull before the next unpredictable developments?

Stocks and the dollar surged on May 12 after the United States and China said they had agreed to a 90-day pause on tariffs and that retaliatory tariffs would be reduced sharply, giving investors confidence that a full-blown trade war may have been averted.

Speaking after talks with Chinese officials in Geneva, US Treasury Secretary Scott Bessent told reporters that the two sides had reached an agreement as outlined in the joint statement and that retaliatory tariffs would be reduced by 115 percentage points.

The meetings over the weekend were the first direct interactions between US and Chinese officials since US President Donald Trump returned to power and launched a global tariff offensive, imposing heavy tariffs on China in particular.

Expert comments:

JAN VON GERICH - CHIEF MARKET ANALYST, NORDEA, HELSINKI:

"The market has taken this news head on. Personally, I'm a little skeptical, if people want to end up with low taxes, why do it this way? Things are still volatile, and uncertainty is still high."

"I'm still concerned that there will be the final word that they've come to an initial conclusion now but the details won't satisfy both sides, and something else will happen, but of course, time will tell. I wouldn't take everything we hear at the moment as absolute truth, that's what we saw on 'Liberation Day' (Trump's tariff announcement on April 2), and now the market is still swinging in both directions."

JANE FOLEY - HEAD OF FOREX STRATEGY, RABOBANK, LONDON:

"The market has been reacting since last night in anticipation of this, and now that we have a little bit more detail, the trend that the market has established since last night continues, which is to buy back the dollar. We are seeing a scenario where the dollar is now seen as a risk asset and is taking profits."

“We have received assurances from the US that the talks will continue and the atmosphere has been positive and that the US and China do not want to separate. So there is more optimism that the tariffs will not be as devastating as they could have been, and there is a collective sigh of relief in the markets.”

“That doesn’t mean we’re back to where we were before Trump took office, the 10% base tariff is still in place everywhere, the 90-day pause has been set and the clock is ticking. The overall scenario isn’t as bad as it could have been, but we still have a huge amount of uncertainty about where these tariffs will settle, what their impact will be on global economic growth and central bank policy.”

KENNETH BROUX - SENIOR FOREX AND YIELD STRATEGIST, SOCIETE GENERALE, LONDON:

“There was a de-escalation of tensions between China and the US, which resulted in a reduction in tariffs on Chinese goods to 30% and Chinese tariffs on US goods to 10%. This was a clear market choice in favour of riskier assets. It was a step in the right direction and a positive signal for US assets and the economy.”

“The dollar has lagged other markets in the recovery from the April lows. We saw stocks rise back to April 2 levels, bond yields rise back to those levels, and the dollar really lagged in that move. Now the conditions are converging for a deeper correction and a larger recovery in the dollar to catch up with stocks and bond yields.”

ZHIWEI ZHANG - CHIEF ECONOMIST, PINPOINT ASSET MANAGEMENT, HONG KONG:

"This is better than I expected. I thought the tariffs would be cut by about 50% and this reduction would be much lower. Obviously, this is very positive news for both the two economies and the global economy, making investors less worried about the damage to the global supply chain in the short term."

"However, we also need to note that this is only a temporary tax cut for 3 months. So this is the beginning of a long process. It may take many months for both sides to come up with a solution, or reach a final trade agreement, but this is a very good starting point."

ARNE PETIMEZAS - RESEARCH DIRECTOR, AFS GROUP, AMSTERDAM:

"The sudden U-turn on tariffs on the morning of May 12 was a pretty big surprise. It looks like tariffs on China will be reduced to acceptable levels, albeit temporarily. The market should rally on this. How can Trump credibly raise tariffs when the 90-day pause is over? He has reduced tariffs faster than anyone thought, and April 2 will soon be forgotten. He literally told you to buy the dip."

WILLIAM XIN - CHAIRMAN OF SPRING MOUNTAIN PU JIANG INVESTMENT MANAGEMENT HEDGE FUND, SHANGHAI:

"The results far exceeded market expectations. Before, the hope was only that the two sides could sit down and negotiate, and the market was very fragile. Now, there is more certainty. Both Chinese stocks and the yuan will be in an upward trend for a while."