Trade War SHOCKER: US and China in DRAMATIC Tariff Deal, Stocks Soar!

2025-05-12 18:01:21.167

US stocks skyrocketed on Monday following a surprising de-escalation of trade tensions with China. President Trump's top trade officials brokered a deal over the weekend, significantly lowering tariffs. The Dow surged approximately 1000 points (2.3%), the S&P 500 rose 2.7%, and the Nasdaq Composite gained 3.5%. This rally erased losses incurred since Trump's April 2nd trade announcement, which had imposed substantial tariffs on various countries, including a 145% levy on most Chinese imports. China had retaliated with its own tariffs. The agreement involved a reduction of tariffs by 115 percentage points, although levies remain higher than pre-Trump levels. A key aspect of the deal is a mechanism designed to prevent future tariff increases. Treasury Secretary Scott Bessent emphasized that the US negotiated from a position of strength due to China's economic vulnerabilities, including a housing crisis and falling consumer spending. The de-escalation eased global recession fears, boosting investor confidence and impacting various asset classes. The US dollar strengthened, oil prices surged, while safe-haven assets like gold and US Treasuries fell. Tech stocks, particularly impacted by the trade war, saw significant gains. Luxury goods and automaker stocks also rebounded sharply. Experts viewed the deal as a positive surprise, although some, like Bessent, characterized it as a temporary pause, with future negotiations focusing on supply chain diversification and fairer international business practices. The agreement was hailed as a significant win for the US economy and consumers, potentially preventing supply chain disruptions from China.