US, China Agreement to Lift Tariffs Sparks Renewed Demand for Risk

The major U.S. equity indexes hit record highs during the pre-market session on a report that the U.S. and China have agreed to lift tariffs in phases as both economic powerhouses continue to make trade deal progress. Details of the agreement are a little scarce at this time since this is breaking news.

At 07:57 GMT, December E-mini S&P 500 Index futures are trading 3087.50, up 12.00 or +0.40%. The high for the session is 3092.50. December E-mini Dow Jones Industrial Average futures are at 27558, up 128 or +0.47%. Its session high is 27598. December E-mini NASDAQ-100 Index futures are trading 8245.75, up 38.50 or +0.47%. It hit a record high of 8263.75 earlier in the session.

According to reports, China and the United States must simultaneously cancel some existing tariffs on each other’s goods for both sides to reach a “phase one” trade deal, the Chinese commerce ministry said Thursday.

The proportion of tariffs canceled must be the same, and how much tariffs should be canceled can be negotiated, said Gao Feng, spokesman at the commerce ministry.

Both sides have agreed in the past two weeks to cancel the additional tariffs imposed during their months long trade war in different phases, Gao said.

Bloomberg is reporting, “The amount of tariff relief that would come in the first phase, set to be signed in the coming weeks, would depend on the content of that agreement,” spokesperson Gao Feng said Thursday, without giving further details. The two sides had “constructive talks” in the past two weeks, he said.

Bloomberg further added, “If confirmed by the U.S., such an understanding could provide a road-map to de-escalate a trade war that’s cast a shadow over the world economy. China’s key demand since the start of negotiations has been the removal of punitive tariffs imposed by President Donald Trump, which by now apply to the majority of its exports to the U.S.