Trade Tensions Pause, Not End: US-China Truce Buoys Risk, EMs Race to Lock Bilateral Wins

Global markets opened to a rare concurrence of good news: softer US inflation, record-setting Wall Street closes, and a 90-day extension of the US-China tariff truce. The reprieve lowers immediate disruption risk for electronics, machinery and consumer durables supply chains that route through East Asia. In Europe, equities advanced on expectations the Fed will move toward a September cut, while export-heavy indices such as the DAX benefited from a weaker dollar impulse and firmer forward order visibility. The relief, however, remains tactical; firms still face elevated policy risk premia in capex models as Washington and Beijing use truce windows to reposition rather than reconcile.

Outside the G2, midsize economies are sprinting to harvest bilateral certainty. Indonesia and Peru announced the conclusion and signing of their Comprehensive Economic Partnership Agreement after just 14 months of negotiations—a brisk timetable by trade standards. The deal aims to lower barriers across agriculture, mining services and processed foods, and gives both sides a hedge against tariff volatility in larger markets. In Africa, South Africa signaled it would table a revised offer to Washington to soften steep US duties imposed last week, underscoring how quickly tariff shocks force recalibration even among diversified exporters.

For corporates planning 2026–27 sourcing and sales footprints, the message is to treat truce time as execution time: diversify tier-2 suppliers in ASEAN and Latin America, pre-clear rules-of-origin compliance for CEPA-enabled corridors, and model sensitivity to a wider tariff band in the US. The opportunity side is real—currency stability, lower freight and a thaw in inventory snarls—yet boards should avoid reading a temporary ceasefire as de-escalation. The smart money is using today’s rally to term out funding, insure critical routes, and pre-negotiate fallback clauses tied to tariff resets.