A significant breakthrough in US-China trade relations has ignited a rally across European markets, offering investors a fresh wave of optimism. The announcement of a 90-day pause in escalating tariffs between the world’s two largest economies has led to substantial gains in key European indices, signaling a potential shift in global economic dynamics.
On May 12, 2025, the United States and China reached a pivotal agreement to reduce reciprocal tariffs, marking a de-escalation in their ongoing trade tensions. The US agreed to lower tariffs on Chinese goods from 145% to 30%, while China reduced its tariffs on US imports from 125% to 10% . This development has been met with enthusiasm in European markets, with Germany’s DAX index climbing 1.8%, France’s CAC 40 gaining 1.3%, and the UK’s FTSE 100 rising 1%.
The tariff reductions have particularly benefited sectors heavily reliant on international trade. European logistics companies experienced notable gains, with Maersk and Hapag-Lloyd shares rising over 10%, and Kuehne+Nagel’s shares increasing by 5.7% . Similarly, the MedTech sector saw positive movement; shares of Philips increased by 5%, Siemens Healthineers rose 4.2%, and Carl Zeiss Meditec climbed 4.8%.
The semiconductor industry also responded favorably to the trade agreement. European semiconductor stocks such as ASML, ASMI, BESI, STM, Infineon, and Melexis experienced increases ranging from 6% to 10% . These gains reflect investor confidence in the easing of supply chain constraints and the potential for increased demand in the technology sector.
Beyond equities, the trade truce has influenced currency and commodity markets. The US dollar strengthened against major currencies, with the euro trading 1.2% lower at 1.1109 . Oil prices also surged, with Brent futures climbing 2.1% to \$65.27 a barrel, and US West Texas Intermediate crude futures rising 2.1% to \$62.29 a barrel.
While the 90-day pause offers a window for further negotiations, analysts caution that the agreement is a temporary measure. The potential for re-escalation remains if substantive progress is not achieved during this period. Nevertheless, the current market response underscores the significant impact of trade relations on global economic sentiment.
The recent US-China trade agreement has provided a boost to European markets, particularly benefiting sectors such as logistics, MedTech, and semiconductors. Investors are advised to monitor developments closely, as the outcome of ongoing negotiations will likely influence market trajectories in the coming months.
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