Global stocks surged Monday after the U.S. and China agreed to de-escalate tariffs that had effectively frozen trade between the world’s largest economies.
The Dow Jones Industrial Average soared more than 1,000 points and the S&P 500 and Nasdaq futures jumped over 2.5% and 3.3%, respectively, after the opening bell.
Stock markets in Asia rallied and Europe’s Stoxx 600 index rose 1% after U.S.-China talks in Switzerland resulted in an agreement to slash levies and pursue a broader agreement that fosters trade.
“I think it’s going to be fantastic for China, I think it’s going to be great for us, and I think it’s going to be great for unification and peace,” Mr. Trump said at the White House. “We have to get it papered, but they’ve agreed to open up China.”
Under the agreement, China agreed to reduce its tariff on U.S. goods from 125 % to 10% and the U.S. agreed to slash its levy on China from 145% to 30%.
The higher U.S.-imposed levy is due to a previous 20% tariff Mr. Trump put on Chinese goods because of the fentanyl crisis.
SEE ALSO: U.S. and China take a step back from sky-high tariffs, agree to pause for 90 days
The countries released a joint statement saying both sides recognize “the importance of a sustainable, long-term, and mutually beneficial economic and trade relationship,” and set up a mechanism for future talks between Chinese Vice Premier He Lifeng and Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer.
Mr. Trump called it a “total reset with China” while negotiators deal with “larger structural” issues regarding trade between the countries.
“The relationship is very good,” he said. “We’re not looking to hurt China.”
Mr. Trump also predicted he would speak to Chinese President Xi Jinping before the end of the week.
For China, Mr. He said the two sides “have taken important steps to resolve differences through equal dialogue and consultation,” according to state news agency Xinhua.
Rep. August Pfluger, Texas Republican and chairman of the Republican Study Committee composed of 189 GOP lawmakers, hailed the Trump administration but urged it to remain vigilant.
“While this represents progress, China’s track record demands our vigilance. Any trade deal must be enforceable to ensure China doesn’t return to its pattern of broken promises and economic exploitation. American strength — not concession — is the only language China understands,” Mr. Pfluger said.
Democrats, meanwhile, argued Mr. Trump was overstating what had been accomplished in Geneva, saying it amounted to a walkback of tariffs that Mr. Trump devised.
“There is no deal. There is nothing approximating a deal. They just make things up constantly,” Sen. Chris Murphy, Connecticut Democrat, said.
The world’s largest economies were locked in a bitter trade war after Mr. Trump unveiled an April 2 “Liberation Day” plan that imposed hefty tariffs on countries that sell plenty of products to U.S. consumers but don’t buy nearly as much from American producers.
China retaliated, resulting in sky-high tariffs that neither side viewed as sustainable.
The standoff caused factory output in China to slow down while U.S. retailers warned of empty shelves of higher prices as they passed along the added costs from tariffs.
Tariffs are a tax or duty paid by importers on the goods they bring in from foreign markets.
Foreign countries don’t pay the tariffs directly to the U.S. Treasury. In many cases, U.S. companies will pay the levies, and they might pass on at least some of the cost to consumers through higher prices.
Mr. Trump says tariffs are a great way to force companies to return to America or keep their operations in the U.S., employ American workers and create revenue to fund domestic programs.
Asked if slashing the tariff undercuts these goals, Mr. Bessent said: “This is just a pause.”
Mr. Bessent noted the 30% tariff is comparable to the 34% “reciprocal” tariff Mr. Trump outlined in his April 2 plan.
He also said the U.S. wants to reduce its reliance on China for critical goods, but does not want to decouple from trading with China completely.
Mr. Trump said the decrease in general tariffs does not apply to sector-specific tariffs that he imposed on things like steel and automobiles, plus looming tariffs on pharmaceutical drugs.
Ngozi Okonjo-Iweala, the director-general of the World Trade Organization, praised negotiators for making progress.
“This de-escalation of tensions will, we hope, have positive spillovers on Global Trade,” she said on X.
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.
Please read our comment policy before commenting.