Something Big Happened Immediately After US-China Announcement
The announcement that the United States and China were cutting tariffs following weekend discussions sent stock markets surging throughout the world.
Dow Jones futures rose by more than 1,100 points, according to CNN. The Standard & Poors and Nasdaq markets rose 3% and 4%, respectively.
“This is a huge positive in the right direction for the markets, and more progress has come out of these Swiss talks than even the bulls were hoping for heading into Friday night,” Wedbush analysts said, according to The Wall Street Journal.
“The magnitude of this tariff reduction is larger than expected. Overall, we expect the market to get back on to a risk-on sentiment in the near term,” said Tai Hui, chief market strategist for Asia Pacific at JPMorgan Asset Management.
Some analysts observed that progress had been made, yet there was still work to be done to reach a final destination.
“We believe peak uncertainty over trade has passed, but market volatility is likely to stay,” UBS head of fixed income Kurt Reiman wrote in a Monday note, according to CNBC.
“Our base case remains that the effective U.S. tariff rate (ex-China) will moderate toward 15 percent by year-end.”
“While the lower tariffs are technically only in place for 90 days, and 30 percent is still quite large on an absolute basis, the news is clearly an upside positive surprise,” equities analyst Adam Crisafulli, head of Vital Knowledge, wrote in research note, according to CBS.
“This is a substantial de-escalation,” said Mark Williams, chief Asia economist with Capital Economics.
The White House on Sunday published details of what could be a historic trade deal with China, the world’s No. 2 economy, after President Donald Trump imposed a series of crippling tariffs aimed at resetting economic conditions between both nations.
“Today, on the heels of the brand-new deal with the United Kingdom, President Donald J. Trump reached an agreement with China to reduce China’s tariffs and eliminate retaliation, retain a U.S. baseline tariff on China, and set a path for future discussions to open market access for American exports,” says a “fact sheet” statement on the deal following two days’ worth of negotiations in Geneva, Switzerland.
“For too long, unfair trade practices and America’s massive trade deficit with China have fueled the offshoring of American jobs and the decline of our manufacturing sector,” the statement added. “In reaching an agreement, the United States and China will each lower tariffs by 115% while retaining an additional 10% tariff. Other U.S. measures will remain in place.”
The statement says that both nations will adopt the new measures on Wednesday, May 14. For now, however, the tariff roll-back is for 90 days, but the news was good enough that the Dow Jones soared 1,000 points at the opening bell on Monday.
“China will remove the retaliatory tariffs it announced since April 4, 2025, and will also suspend or remove the non-tariff countermeasures taken against the United States since April 2, 2025,” the fact sheet says. “China will also suspend its initial 34% tariff on the United States, it announced on April 4, 2025, for 90 days, but will retain a 10% tariff during the period of the pause.”
“The United States will remove the additional tariffs it imposed on China on April 8 and April 9, 2025, but will retain all duties imposed on China prior to April 2, 2025, including Section 301 tariffs, Section 232 tariffs, tariffs imposed in response to the fentanyl national emergency invoked pursuant to the International Emergency Economic Powers Act, and Most Favored Nation tariffs,” it adds, noting the U.S. will also suspend its 34 percent reciprocal tariff for the time period.
The fact sheet went on to say that both sides will continue negotiations on a longer-term deal after the 90-day period begins.
The agreement also addresses the fentanyl crisis in the U.S., which Trump and previous presidents have blamed partially on China for supplying drug-making materials to Mexico-based cartels that then smuggle the finished product across the border.
