For investors cheering the U.S.-China tariff truce, Goldman Sachs cautioned that the damage from President Donald Trump’s trade war is still poised to be significant. Stocks rallied Monday after the U.S. and China agreed to suspend most tariffs on each other’s goods for 90 days, cutting “reciprocal” tariffs from 125% to 10%. The U.S.′ 20% duties on Chinese imports relating to fentanyl will remain in place, meaning total tariffs on China stand at 30%. The Wall Street firm pointed out that the reduction in China tariffs would imply only a less than two percentage-point decrease to the U.S. current overall duty rate on the rest of the world. “The large reduction in the US tariff rate on China should only have a limited impact on the overall US effective tariff rate,” Goldman said. “After accounting for a reduction of that magnitude, the full set of US tariffs would still be considerably higher and broader than expected by markets at the start of the year.” The breakthrough comes after U.S. and China trade representatives held high-stakes talks in Switzerland over the weekend. The pause will begin Wednesday. Treasury Secretary Scott Bessent said Monday that he expects to meet with Chinese officials again in the coming weeks to continue trade negotiations. The exact details of the meeting, such as location, have not been set, but there is now a “mechanism” for further talks, Bessent said. Still, Goldman warned that the uncertainty hasn’t been fully removed as the two countries continue negotiations in the coming months. “The agreement constitutes a 90-day delay rather than an indefinite removal, which should keep uncertainty high for both investors and businesses on the end point for tariffs,” Goldman said. — CNBC’s Michael Bloom contributed reporting.
