Dow Surges 1,000 Points as U.S. and China Slash Tariffs in Major Trade Breakthrough

 U.S. markets soared on Monday after a dramatic turn in trade negotiations between the United States and China led to a significant reduction in tariffs. The Dow Jones Industrial Average surged over 1,000 points, or 2.5%, while the S&P 500 climbed 2.85% and the Nasdaq Composite jumped 4%.

The rally comes in response to a breakthrough in Geneva over the weekend, where top U.S. trade officials and their Chinese counterparts agreed to cut tariffs by 115 percentage points. While levies remain higher than pre-2017 levels, the rollback represents a substantial easing of trade tensions that had paralyzed trade between the two nations.

Historic Shift in Trade Policy

President Donald Trump’s administration had previously imposed tariffs as high as 145% on Chinese imports, triggering retaliatory measures from Beijing and raising fears of a deep economic slowdown. Monday’s agreement drastically scales those back, with U.S. import tariffs on Chinese goods falling to 10%.

Treasury Secretary Scott Bessent, who led the U.S. negotiating team along with Trade Representative Jamieson Greer, described the talks as “tough but respectful.”

“We came with a list of problems that we were trying to solve, and I think we did a good job on that,” Bessent said on CNBC.

Bessent emphasized the U.S.'s strong negotiating position, citing China’s ongoing economic challenges, including a housing crisis, rising debt levels, and weakening consumer demand.

Wall Street Cheers Breakthrough

The announcement triggered a wave of optimism across financial markets. Riskier assets rallied as investors welcomed the news:

Apple (AAPL) rose 7%

Tesla (TSLA) gained 7.7%

Amazon (AMZN) climbed 8%

Nvidia (NVDA) and Intel (INTC) were up 5.1% and 4.1%, respectively

Luxury brands also rebounded sharply, with Hermès, Burberry, and LVMH posting gains between 4% and 7%. Automakers joined the rally: Stellantis (STLA) jumped 9%, while GM and Ford rose 4% and 2%.

Meanwhile, oil prices rebounded as fears of a global slowdown eased. U.S. crude rose 3.4% to $63 per barrel, while Brent crude climbed 3.2% to $66.

Safe-haven assets fell, with gold dropping 2.5% and the 10-year U.S. Treasury yield rising above 4.45%. The CBOE Volatility Index (VIX), Wall Street’s “fear gauge,” sank 10% to its lowest level since March.

A Pause, Not a Pivot

Despite the magnitude of the tariff rollback, Bessent stressed that the move should not be seen as a wholesale change in U.S. trade policy.

“This is just a pause,” he said. “The April 2 tariff level for China was 34%. We have moved that down to 10%.”

Looking ahead, the administration plans to focus on building resilient domestic supply chains for critical sectors including pharmaceuticals, semiconductors, and steel — a lesson learned from pandemic-era disruptions.

“Efficient supply chains are not resilient supply chains,” Bessent said. “We are going to create our own.”

He also highlighted efforts to dismantle “non-tariff barriers” that hinder U.S. firms operating abroad.

Economists, Officials Hail Progress

Economists were quick to frame the deal as a potential turning point. Deutsche Bank strategist Henry Allen noted the move could help the U.S. avoid recession.

“This morning’s news of lower U.S.-China tariffs adds to the evidence against a global downturn,” Allen said in a client note.

Kevin Hassett, Director of the National Economic Council, called the agreement a “historic fresh start” in U.S.-China relations.

“A lot of the risk around supply disruptions is now off the table,” Hassett told CNN.

He also pointed to recent concessions from the U.K., including greater market access for American beef, as evidence of broader success in the Trump administration’s evolving trade strategy.

The Bigger Picture

Just days ago, the Trump administration had defended zero trade with China as a pathway to restoring domestic manufacturing. Now, the tone has shifted.

“If we don’t work out that good deal, we’ll be fine,” Hassett explained. “But if we can secure one — like we have now — even better.”

While the trade détente is being welcomed by markets, businesses, and consumers, the long-term direction of U.S. policy remains focused on reducing dependency on China in key sectors, setting the stage for the next phase of global trade realignment.