Stocks surged after U.S. and Chinese officials said they agreed to temporarily suspend most of the tariffs they have imposed on each other, the latest sign that trade policy announcements are the main driver of market movements since President Trump returned to office.
The S&P 500 gained nearly 3 percent in early trading, putting the index on track for its best day since April 9, when a huge rally was spurred by Mr. Trump pausing his “reciprocal” tariffs on all countries except China. The tech-heavy Nasdaq climbed even higher, rising about 4 percent.
The apparent thaw in relations between the United States and China, even if temporary, was the latest concession offered by the Trump administration, which had sent stocks tumbling last month after announcing unexpectedly high tariffs on dozens of countries.
The S&P 500 had dropped steeply after Mr. Trump announced sweeping tariffs in early April, but it has since rebounded, recovering all of those losses as various exemptions and pauses to tariffs were announced.
In a joint statement, released on Monday after weekend talks in Geneva, the United States and China said they had reached an agreement to reduce their respective tariffs for 90 days while trade negotiations continue.
The United States would reduce the tariff on Chinese imports to 30 percent from its current 145 percent, while China would lower its import duty on American goods to 10 percent from 125 percent.
After the statement’s release, the U.S. dollar strengthened against a wide range of currencies. U.S. Treasury yields also rose.
Elsewhere, Hong Kong’s benchmark Hang Seng Index jumped about 3 percent, while Europe’s Stoxx 600 index rose about 1 percent. Oil prices, which are sensitive to expectations of global economic growth, also rose, gaining more than 3 percent.
Despite the recent recovery in markets, investors have remained anxious amid swings after every presidential announcement about trade policy. The “highly stage-managed de-escalation” between the United States and China on Monday was notable for providing more clarity about the potential contours of Mr. Trump’s on-again, off-again tariff policy, said George Saravelos, the global head of foreign exchange research of Deutsche Bank.
He noted that China, which runs a huge trade surplus with United States, now faces a 30 percent tariff while Britain, which has a relatively balanced trade relationship with the United States, reached an agreement last week that resulted in 10 percent tariffs for most goods. “It is reasonable,” said Mr. Saravelos “that these two numbers now set the bounds of where American tariffs will end up this year, a material increase in visibility from just last week.”
Over the weekend, Washington and Beijing held their first meetings since ratcheting up tit-for-tat trade barriers on each other, effectively blocking much of the trade between the countries.
Before discussions began, investors had relatively low expectations for a breakthrough at the talks that would result in a meaningful reduction in tariffs. After the trade conversations concluded, however, officials from both sides touted significant progress.
That was enough to edge stocks higher in Japan, South Korea and mainland China. Details of the U.S.-China tariff agreement were announced late in the afternoon in Asia, after most stock exchanges had stopped trading.
“The conflict between the United States and China over tariffs has passed a major hurdle,” said Takahide Kiuchi, executive economist at the Nomura Research Institute in Tokyo. The Trump administration is wary of tariffs dealing a major blow to the U.S. economy and therefore it is unlikely that levies will be raised higher than 100 percent again, he said.
The stocks most exposed to global trade flows surged on the news. For example, A.P. Moller-Maersk and Hapag-Lloyd, two of the world’s largest shipping companies, jumped more than 10 percent.
Economists have warned that U.S.-China trade tensions significantly increased the possibility of an economic downturn.
The World Trade Organization has forecast that the continuing division of the global economy into “rival blocs” could cut global gross domestic product by nearly 7 percent over the long run. In April, the International Monetary Fund lowered its 2025 outlook for all Group of 7 nations largely because of U.S. tariffs.
River Akira Davis covers Japan, including its economy and businesses, and is based in Tokyo.
Jason Karaian is the business news director, based in London. He was previously the editor of DealBook.
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