Trillions Returning to US Stock Market after New Tariff Deal
The United States equity market regained its stride on Monday, recovering close to two trillion dollars in capitalisation after Washington and Beijing announced a 90-day rollback of the steep tariffs rattling investors for weeks. The S&P 500 climbed 2.53# to 5,804, the Dow Jones Industrial Average advanced 2.51%, and the tech-heavy Nasdaq Composite surged 4.1%, a rally analysts said restored much of the value erased by April’s tariff shock. Rough estimates based on current index capitalisations suggest the single-day jump added just over two trillion dollars to listed US companies.
Tariff truce in detail
Under the Geneva accord, the United States will cut the “reciprocal” tariff it imposed on Chinese imports last month from 145% to 30% for the next three months, while China will trim its duties to 10% from 125%. Both sides framed the pause as breathing space to pursue a fuller agreement and launched a new economic dialogue to hammer out longer-term terms. Although specific product lists are still being finalised, sector-specific US tariffs on cars, steel and aluminium remain in force, and the White House kept a separate 20% levy tied to China’s role in the US fentanyl crisis.
Wall Street’s riposte
Investors greeted the news with a broad re-rating of risk assets. Tech mega-caps led the charge, with Apple up more than six per cent and Nvidia nearly five. All eleven S&P sectors closed higher, with consumer discretionary and semiconductors out in front. Treasury yields rose as traders priced out some of the interest-rate cuts they had expected later in the year, while the dollar index strengthened almost one per cent. Energy shares benefited from a near-four-per-cent rebound in Brent crude, and gold slipped as demand for havens eased. Market strategists, however, were quick to point out that the relief rally followed one of the deepest sell-offs since the pandemic era, leaving sentiment fragile.
The optimism was mirrored overseas. Hong Kong’s Hang Seng Index gained 2.6%, the Shanghai Composite 1.2% and Japan’s Nikkei 225 almost two per cent. In Europe, the Stoxx 600 added 1.1%, buoyed by exporters that depend on trans-Pacific supply chains. China’s renminbi touched a six-month high as capital inflows bet on improved trade volumes, while industrial metals and shipping rates also firmed. Many economists now expect the tariff reprieve to nudge global GDP forecasts slightly higher for the second quarter, even if the underlying imbalances remain unresolved.
Caution from analysts and businesses
Despite the surge, portfolio managers stressed that the headline deal is provisional. Mohamed El-Erian of Allianz called the agreement a “welcome de-risking” but warned that tariffs still sit far above pre-war norms and could reignite inflation pressures. Retailers and manufacturers likewise urged clarity, saying 90 days is too brief to rebuild inventories or reroute supply chains. Labour groups on both sides of the Pacific complained that the truce sidesteps structural issues such as subsidies and intellectual-property rules. Treasury Secretary Scott Bessent acknowledged those gaps, telling reporters that “years of work” lie ahead before trade flows normalise.
President Donald Trump portrayed the breakthrough as evidence that his hard-line strategy yields results, while Chinese Vice-Premier He Lifeng hailed “substantial progress” but emphasised mutual respect. The timing also dovetails with Trump’s promise to refocus on the European Union once the China front stabilises. Legislators from both parties signalled they would scrutinise any permanent accord for enforcement mechanisms, hinting that congressional approval could prove contentious in an election cycle already dominated by economic anxiety.
Summary
For now, the tariff ceasefire has returned a measure of calm to markets and injected fresh momentum into equities that had flirted with correction territory only a fortnight ago. Yet the simultaneous rise in bond yields and oil prices underscores how swiftly sentiment could reverse if negotiations stall. Investors appear to view Monday’s gains less as a green light for unchecked risk-taking than as a reprieve from a self-inflicted slowdown. Whether the two superpowers can convert 90 days of goodwill into a durable trade framework will determine if the trillions reclaimed this week are a foundation for sustained growth or another fleeting market detour.
