📈 Surprise Tariff Cut Sparks Market Rally

Author

Journals GG
May 12, 2025

Good Morning & Happy Monday!

From a surprise US - China tariff truce and a pharma sell-off sparked by Trump, to stablecoins on the rise and Powell’s make-or-break speech ahead.

Grab your Iced Latte and let’s get into it. 👇️ 

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Markets

📈 US and China reach deal to slash trade tariffs
The U.S. and China just hit pause on their trade war. After high-stakes talks in Geneva, both sides agreed to slash tariffs to a 10% baseline for 90 days, easing fears of economic decoupling. Treasury Secretary Scott Bessent called the previous tariffs “the equivalent of an embargo”, and says neither side wants that anymore.

🟩 Stocks soar on tariff pause
Tech stocks came roaring back Monday after the U.S. and China agreed to pause most tariffs, easing fears over disrupted supply chains. Semiconductor giants like AMD, Nvidia, and Marvell jumped 4–7%, while Apple and Amazon surged over 6% and 8%, respectively. TSMC, ASML, and Infineon also rallied as global chipmakers caught a much-needed break.

Our Take: This move surprised many investors, while most expected some tariff relief following the talks, few anticipated such a dramatic cut. The scale of the reduction went well beyond what markets had priced in.

👀 What to watch this week
All eyes are on inflation, spending, and the Fed this week. CPI and retail sales data will be crucial in shaping expectations for rate cuts, with Powell’s Thursday speech at 12:40 GMT set to be the most market-moving moment. Traders are bracing for clues on the timing of monetary easing, while consumer sentiment on Friday could add more fuel, or caution, to the mix.

  • U.S. tariff rollback: Extra tariffs on Chinese goods reduced from 145% to 30%

  • China tariff rollback: Tariffs cut from 125% to 10%

  • China to reverse non-tariff countermeasures imposed after April 2, including:

    • Removal of some U.S. companies from blacklists

    • Halting the anti-dumping probe into DuPont

❌ Not agreed / Unmentioned:

  • Earlier U.S. tariffs (pre-April 2) still apply, leaving China with a 30% effective rate

  • Tariffs on key Chinese exports (EVs, steel, aluminum) from prior rounds remain in place

  • Rare earth export controls from China not explicitly addressed, unclear if rollback includes U.S.-specific relief

  • China’s Blacklists and investigations announced before April 2 (e.g., against Google) still active.

Markets

Trump vs Big Pharma

In a Truth Social post, former President Donald Trump said he’ll sign an executive order enforcing a “Most Favored Nation” (MFN) policy to slash U.S. prescription drug prices to match the lowest prices paid globally. That sent a shockwave through global pharmaceutical markets.

  • European giants like Roche, AstraZeneca, and Novo Nordisk saw share drops up to 5%.

  • In Japan, pharma stocks posted their worst single-day drop since August.

  • U.S. companies like Pfizer, Merck, and Eli Lilly also slipped in early trading.

Important to note: This isn’t Trump’s first attempt to push the Most Favored Nation (MFN) model.

Back in his first term, Trump floated the same idea, aiming to tie U.S. drug prices to cheaper rates paid by other countries with government-run health systems. That proposal never got off the ground, it was blocked by a federal judge after major pharmaceutical companies sued to stop it.

What’s different now? Trump’s trying again via executive order, potentially bypassing the slower regulatory process. But legal challenges are still likely.

🌎️ Stablecoins Will Expand Beyond Crypto
Stablecoins are poised to outgrow the crypto markets they came from, says Citi. With regulatory backing and wider adoption, these dollar-pegged tokens could expand into payments, remittances, and even bank liquidity. Citi projects the market could swell from $240B today to $1.6T–$3.7T by 2030, potentially surpassing the current $3.45T crypto market cap.

Quick Links

💊 Indian pharma stocks fall as Trump moves to cut U.S. drug prices
🇰🇷 South Korea to respond to US over tariffs on chips, biopharmaceuticals
🇯🇵 Asia’s Biggest Corporate Bitcoin Holder Buys Another $126M in BTC
📽️ Trump administration fires top U.S. copyright official
🇺🇦 Zelensky to travel to Turkey for potential talks with Putin
🤖 Amazon offers peek at new human jobs in an AI bot world

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