US stocks surged on Monday after a surprising de-escalation in trade tensions between the United States and China. President Donald Trump’s top trade officials managed to broker a deal that significantly lowered tariffs. The Dow Jones Industrial Average closed 1,161 points higher, or 2.81%.
The broader S&P 500 gained 3.26%, and the tech-heavy Nasdaq Composite surged 4.35%. These gains mark the biggest single-day advances for all three major indices in more than a month. Initially, tariffs had climbed to unsustainably high levels, peaking at 145% on most Chinese imports.
China responded by hiking tariffs to 125% on US goods. The back-and-forth had effectively halted trade between the two economic giants, leading to fears of substantial price increases and shortages. US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer, along with their Chinese counterparts, reached a détente over the weekend in Geneva.
The agreed tariff reductions, while still higher than levels before Trump took office, are much lower than the recent historic peaks that deeply troubled American businesses, consumers, and investors.
Trade détente boosts market surge
President Trump confirmed during a Monday press conference that the previously proposed 145% tariffs would not be reinstated even if future trade talks hit an impasse.
The de-escalation of tariffs has further reduced global recession risks. The positive sentiment extended to markets worldwide, with investors showing greater appetite for riskier assets. US oil prices rose 1.52%, and gold experienced a significant sell-off, dropping 2.7%.
Meanwhile, safe-haven assets like US Treasury bonds fell, sending the 10-year yield back above 4.45%. Tech stocks, having been particularly affected by the trade conflict, saw significant gains. Apple surged 6.3%, Tesla rose 6.75%, Nvidia was up 5.4%, Amazon climbed 8.1%, and Intel gained 3.55%.
Luxury goods makers and automakers also posted strong performances. Bessent described the negotiations as tough but respectful, underscoring that the US had negotiated from a position of strength due to China’s current economic struggles, including a housing crisis and falling consumer spending. Despite the dramatic reduction in tariffs, Bessent maintained that this was not a substantial policy shift but merely a pause.
Overall, the unexpected tariff reduction and the promise of continued dialogue were well-received by Wall Street, consumers, and businesses alike who hope for lasting stability in trade relations.