Prominent economists offered mixed reactions Sunday as markets rallied following announcement of a tentative U.S.-China trade agreement reached during weekend talks in Geneva, with futures surging on optimism despite limited details of the actual terms.
What Happened: Mohamed El-Erian, Chief Economic Advisor at Allianz, highlighted the importance of the talks, noting they “will shed light on three major aspects: China’s appetite for pain, America’s fear of ’empty shelves,’ and how each country prioritizes longer-term trade policy objectives.”
El-Erian emphasized the deal’s significance extends beyond bilateral relations, writing on Substack that “the longer the US retains prohibitive tariffs on China, the greater the likelihood that other countries will be forced to impose their tariffs on Beijing to protect against dumping.”
Economist Peter Schiff expressed skepticism, writing on X: “If the deal includes major reductions in tariffs, the only thing that could reduce our trade deficit would be a substantial upward revaluation of the RMB [Renminbi] .”
Why It Matters: U.S. Treasury Secretary Scott Bessent praised the “substantial progress” between the two countries, while Trade Ambassador Jamieson Greer noted the speed with which negotiators “were able to come to [an] agreement” addressing what he termed a “national emergency” — the $1.2 trillion trade deficit.
Markets responded positively, with S&P 500 Futures rising 1.35% to 5,754.50, while recession odds on prediction market Polymarket fell below 50% for the first time in weeks. The dollar strengthened, trading up 0.26% at 100.67.
Chinese Vice Commerce Minister Li Chenggang called the outcome “good news for the world,” with both sides promising to release complete details Monday.
Photo Courtesy: Dilok Klaisataporn On Shutterstock.com
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