Dow soars 1,000 points after Trump team and China dramatically lower tariffs

U.S. markets surged Monday after President Donald Trump’s trade team reached a surprise truce with China. Top officials from both countries agreed to slash tariffs, easing fears of a recession and reviving investor confidence.

The Dow Jones Industrial Average jumped over 1,000 points, a 2.5% gain. The S&P 500 rose 2.85%, and the Nasdaq climbed 4%.

This dramatic turnaround followed a weekend meeting in Geneva between U.S. and Chinese trade negotiators. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer led the U.S. side.

The key outcome: Both nations cut tariffs by 115 percentage points. This move unwound the harshest trade barriers imposed since Trump’s April 2 "Liberation Day" announcement.

At that time, the U.S. levied 10% tariffs on nearly all imported goods and raised rates on key nations. Most were paused later, but tariffs on Chinese goods hit 145%. In response, China raised its tariffs on U.S. goods to 125%. The tit-for-tat escalation nearly halted trade between the two nations.

Now, both countries plan to keep tariffs around 10% to 30%—still high, but far below recent levels.

“There are still lots of factors pointing away from a recession,” said Henry Allen, a strategist at Deutsche Bank. “Lower tariffs are part of that.”

Allen added that Monday’s rally itself could ease financial conditions and calm recession fears.

Markets reacted immediately. The U.S. dollar rose 1.2%. Oil prices jumped as demand fears faded. U.S. crude rose 3.4% to $63 a barrel, while Brent crude climbed 3.2%.

Investors ditched safe-haven assets. Gold prices fell 2.5%, and Treasury yields rose above 4.45%.

Wall Street’s fear index, the CBOE Volatility Index, dropped 10%. CNN’s Fear and Greed Index pointed to “greed” as the dominant market emotion.

Technology stocks led the rally. Apple surged 7%, Amazon rose 8%, and Tesla climbed 7.7%. Nvidia and Intel also posted strong gains.

Luxury brands and automakers recovered too. LVMH, Burberry, and Hermes all rose between 4% and 7%. General Motors, Ford, and Stellantis also posted solid gains.

“This is just a pause,” said Bessent in an interview with CNBC. He emphasized that the April 2 tariff level for China was 34%, now cut to 10%.

Bessent called the talks “firm but respectful.” He said the U.S. negotiated from a position of strength, citing China’s weakening economy. Factory output and consumer spending in China have declined. The country also faces a growing debt crisis.

“I had seen what’s going on in the Chinese economy,” Bessent said. “We are the deficit country, which puts us in a stronger position.”

Despite the win, he noted the deal doesn’t signal a policy shift. The administration still wants to reduce U.S. reliance on China for strategic goods like semiconductors and medicine.

“We realized that efficient supply chains weren’t resilient,” Bessent said. “We’re going to create our own.”

The U.S. will also push against non-tariff trade barriers that hurt American firms abroad.

Kevin Hassett, Director of the National Economic Council, called the deal a “historic fresh start.” He praised new access for American beef in the UK and a possible opening in China’s markets.

“A lot of that is cleared up now,” Hassett told CNN. “The potential for supply disruptions from China is lower.”

Still, he echoed Trump’s past stance: “If we don’t work out that good deal, we’ll be fine.”

Economists had warned that unchecked tariffs could trigger inflation and spark a recession. American companies feared shortages. Consumers worried about rising prices.

Now, with the de-escalation in place, markets appear optimistic.

‍