
US stocks surged on Monday after President Donald Trump’s top trade officials brokered a surprisingly dramatic de-escalation in trade tensions with China, slashing tariffs to far lower levels.
Futures on the Dow Jones Industrial Average jumped more than 1,000 points, or 2.6%. S&P 500 futures climbed 3%, while Nasdaq futures surged 3.9%.
Markets were on track to erase all losses since Trump’s April 2 “Liberation Day” trade announcement, which had imposed a 10% tariff on virtually all goods entering the United States and significantly higher levies on dozens of countries. Although most of those tariffs were paused just days after implementation, import taxes on China were ratcheted up—eventually reaching 145% on most Chinese goods.
In retaliation, China raised tariffs on American imports to 125%. The tit-for-tat trade war had brought bilateral trade to a near halt, threatening steep price increases and product shortages.
Trump and Treasury Secretary Scott Bessent had both acknowledged in recent weeks that tariffs on Chinese goods had reached unsustainable levels and that a détente was necessary. However, few anticipated just how far-reaching the outcome of this weekend’s negotiations in Geneva—led by Bessent, US Trade Representative Jamieson Greer and their Chinese counterparts—would be.
Both nations agreed to slash tariffs by 115 percentage points, still leaving duties considerably higher than pre-Trump levels, but far below the historic highs seen over the past month that had alarmed businesses, consumers, economists and investors alike.
A key breakthrough was the establishment of a mechanism to prevent future tariff escalations, indicating that the worst of the trade war may be behind us.
“There remain several factors pointing away from a global recession, and this morning’s announcement of lower US-China tariffs adds to that case,” said Henry Allen, strategist at Deutsche Bank, in a note to investors on Monday morning. “The market’s resilience is itself reducing recession risk by loosening financial conditions. And as we saw with the 90-day extension to reciprocal tariffs, policymakers are clearly wary of triggering a downturn.”
Wall Street welcomed the news. Risk appetite returned, with investors pouring into equities. The US dollar rose 1% against a basket of currencies. US crude oil, which had slumped on fears of a demand vacuum due to a tariff-induced global slowdown, bounced 3.5% to $63 a barrel. Brent crude rose 3.3% to $66.
By contrast, traditional safe-haven assets saw sell-offs. Gold dropped 3.9%, and US Treasury bonds fell, pushing the 10-year yield back above 4.45%. Yields move inversely to bond prices. Japan’s yen weakened by 1.5%.
Technology stocks led the rally. Despite a recent exemption for hardware from Chinese tariffs, the sector had been especially vulnerable due to the deep interconnection between US and Chinese tech industries. Apple rose 7%, Tesla gained 7.7%, Nvidia was up 5.1%, Amazon climbed 8% and Intel added 4.1%.
Luxury goods makers, which had been hit hard in recent months, staged a sharp recovery: Hermes rose 4%, Burberry 6%, and LVMH jumped 7%.
Automakers also posted strong gains: Stellantis, which owns Jeep and Chrysler, surged 9%, General Motors rose 4% and Ford added 2%.