- Major U.S. stock indexes shot up Monday following news of U.S.-China trade deal.
- Investors have been on a roller-coaster ride amid trade policy gyrations.
- Industry watchers say more volatility is likely thanks to temporary agreements.
U.S. investment markets were riding a value surge following a new U.S.-China trade agreement announced Monday that temporarily slashes retaliatory tariffs from both countries by 115%.
As of late Monday morning, the Dow Jones Industrial Average was up over 900 points, the S&P 500 gained 2.6% and the Nasdaq Composite popped 3.5% in heavy trading driven by the positive international news.
The U.S.-Sino trade deal announcement followed two days of meetings in Geneva between Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer with a delegation of Chinese officials.
“We had very productive talks and I believe that the venue, here in Lake Geneva, added great equanimity to what was a very positive process,” Bessent said during a Monday news conference.
“We have reached an agreement on a 90-day pause and substantially move down the tariff levels. Both sides on the reciprocal tariffs will move their tariffs down 115%.”
The deal relieves — at least for the moment — an escalating trade war between the U.S. and China that had dragged market values down and left U.S. businesses, and particularly those that rely on robust import/export traffic, in a realm of uncertainty.
But even amid Monday’s positive response from investors in the major U.S. stock indexes, analysts warned that continued volatility could be in the offing.
“No one had these low China tariff rates on their bingo cards. This is a big positive surprise,” said Jeff Buchbinder, chief equity strategist at LPL Financial, per CNBC. But “this is de-escalation, not a trade deal. More work remains to be done. A pause isn’t permanent. China just got the same deal as all other countries.”
Ups and downs of tariff policy
U.S. stock markets have been on a roller-coaster ride as overall investor sentiment has wavered in the wake of Trump’s international trade policy shifts. While markets fell dramatically following the president’s unveiling of a raft of new reciprocal tariffs on April 2, Trump’s so-called “Liberation Day”, there was broad recovery a week later when most of the new levies were placed on a 90-day pause.
The stiff retaliatory tariffs between U.S. and China, with 145% fees on many Chinese goods coming into the U.S. and a 125% rate on U.S. exports to China, had chilled the international shipping industry as many businesses on both sides of the Pacific pushed pause on orders and procurement thanks to the ultra-high levies.
Stocks showing strong rallies on Monday included Tesla up 7% around midday, with Apple and Nvidia both gaining 5% , according to CNBC. Shares of companies that rely the most on Chinese goods showed some of the biggest gains Monday with Best Buy shares up 7%, Dell Technologies rising 7% and Amazon jumping by 5%.
While U.S. markets were strongly in the green on Monday, market analysts warned that the tariff policy was still very much in a state of flux, with many current trade agreements only functioning on a temporary basis.
“Nothing is ever permanent when it comes to Trump’s tariffs (and there is a July 9 deadline for reciprocal tariffs and an August deadline for China), but maybe Trump has found a rough tariff equilibrium for now — a 10% universal tariff, 25% product tariffs, and 30% China tariffs,” Piper Sandler head of U.S. policy Andy Laperriere wrote in a Monday note, according to a Monday report from CNBC.