U.S. markets climbed sharply on Monday morning after a breakthrough in trade discussions between the White House and Beijing led to a temporary agreement to ease tariffs for a three-month period—a move that could signal a turning point in the ongoing economic standoff between the two global superpowers.
The Dow Jones Industrial Average surged by 1,044 points, marking a 2.5% gain. Meanwhile, the S&P 500 rose 2.9%, and the Nasdaq jumped 4%, fueled by investor optimism over the easing tensions.
Treasury Secretary Scott Bessent described the weekend negotiations in Switzerland as “very productive,” revealing that both countries had agreed to a 115% reduction in tariffs for 90 days.
This means that U.S. duties on Chinese goods will now stand at 30%, and China’s tariffs on American products have been scaled back to 10%.
A separate 20% import tax on Chinese goods, which President Trump linked to China’s role in fentanyl trafficking, will remain unchanged.
Bessent also hinted at the possibility of a more comprehensive trade deal being formed soon.
“I would imagine in the next few weeks we will be meeting again to get rolling on a more fulsome agreement,” Bessent told CNBC’s “Squawk Box.”
The tech sector reacted positively, with major gains among companies that manufacture or depend on low-cost Chinese production.
Apple, which assembles most of its iPhones in China, saw its stock rise 5.1%, while Amazon’s share price increased by 8.6%.
Other consumer electronics companies also enjoyed a boost. Dell Technologies jumped 7% on the news.
Retailers specializing in electronics, computers, and smart devices also surged. Best Buy’s stock climbed 8.1% during morning trading.
Carol Schleif, chief market strategist at BMO Private Wealth, said in a note, “The larger-than-expected drop in the tariffs between the US and China, while temporary, and the establishment of a framework for continued discussion, is exactly what the stock market was hoping to see.”
She added that the timing of the truce is ideal for the retail sector, which is gearing up for the crucial back-to-school and holiday shopping periods.
Before the announcement, businesses and consumers were bracing for heavy tariff-related expenses that could have sharply driven up prices on everything from tech gadgets to apparel and toys.
Even though the revised tariff levels still raise costs, they are far more manageable than the 145% levy Trump introduced last month—and China’s retaliatory 125% tax.
With the S&P 500 now sitting above where it was on April 2—the day Trump launched his aggressive “reciprocal” tariff initiative on what he dubbed “Liberation Day”—investors seem to be regaining some confidence.
“While the thawing in the trade war with China is a welcome sign, base level tariffs are still substantially higher than where they started, with some level of damage likely to work its way into the economic data in the months to come,” Schleif said.
The economic effects are already being felt. Gross domestic product contracted in the first quarter of 2025 as U.S. companies scrambled to import goods before the original tariff hikes took effect.
At the same time, Chinese exports to the U.S. have slowed significantly, and small businesses are reporting that higher costs have led to postponed or canceled inventory orders.
{Matzav.com}