Wall Street exploded in optimism Monday after the Trump administration and China announced a mutual reduction in tariffs amid talks to reach a permanent trade agreement.
The Dow Jones Industrial Average rose 1,160.72 points, which comes to 2.81 percent. The Dow closed at 42,410.10, according to CNBC.
The S&P 500 rose 3.26 percent. Since an April dip when traders worried about the impact of President Donald Trump’s tariffs on the economy, it has risen more than 20 percent.
The Nasdaq Composite rose 4.35 percent.
According to the deal reached over the weekend, the United States and China will each lower the current tariff rate on each other’s imports by 115 percent. That sets the tariff on Chinese goods coming into the U.S. at 30 percent and the rate for American goods entering China at 10 percent, according to ABC.
The agreement, which will be in place for 90 days, also commits the two sides to begin talks on a longer-term trade agreement.
The rise in stock meant that the Dow on Monday closed higher than on any month between the time former President Joe Biden was sworn into office in January 2021 and October 2024, the last full month before Trump’s election.
According to Yahoo, the best month-end figure for the Dow in that time period was September 2024, 42,330.15. During that time period, the Dow broke 40,000 only four times. It has done so every month under Trump.
Is it surprising that Trump’s economy is so much stronger than Biden’s?
Experts voiced a mix of delight and caution with their assessment of the stock market’s rebound.
“No one had these low China tariff rates on their bingo cards,” said Jeff Buchbinder, chief equity strategist at LPL Financial, according to the Wall Street Journal.
“Risk remains that tariffs go back up from current levels as the pauses end, though taking worst-case scenarios off the table is reassuring.”
Seema Shah, chief global strategist at Principal Asset Management, said the deal helps supply chain companies. Shares of Old Dominion Freight Line and J.B. Hunt Transport Services each rose more than 9 percent on Monday.
“Of all the trade deals, this is the one that really matters for the U.S. economy,” he said. “The tariff rate is still elevated, but it brings down the overall U.S. average tariff rate to around 12 percent, indicating a much smaller negative impact on the economy.”
“This was sort of the ultimate positive catalyst in terms of getting a pretty meaningful pause with a pretty meaningful trade partner,” Charles Schwab senior investment strategist Kevin Gordon said, according to Yahoo.
“The larger-than-expected drop in the tariffs between the U.S. and China, while temporary, and the establishment of a framework for continued discussion, is exactly what the stock market was hoping to see,” said Carol Schleif, chief market strategist at BMO Private Wealth, according to CNN.
Is it possible that what went up before could go up again?
Trump said he has no plans to slap a 145 percent tariff on China again when asked if he would retaliate if trade talks fail.
“No, but they would go up substantially higher,” he said, adding, “I think you will have a deal, however.”
Advertise with The Western Journal and reach millions of highly engaged readers, while supporting our work. Advertise Today.
