Markets Rally After US, China Announce 90-day Tariff Reductions

Stocks, crude oil, and Treasury yields pop on temporary tariff cuts.

U.S. stocks rallied on May 12 after the United States and China agreed to temporary tariff reductions.

The blue-chip Dow Jones Industrial Average soared by 1,160 points, or 2.8 percent. The index has erased most of 2025โ€™s losses and is down by less than 1 percent.

The tech-heavy Nasdaq Composite Index is on track to exit the bear market. To kick off the trading week, it soared by nearly 780 points, or 4.35 percent. Year to date, the Nasdaq has tumbled by more than 3 percent.

The broader S&P 500 climbed by close to 200 points, or 3.3 percent, and is down by about 0.7 percent so far in 2025.

Investors cheered the worldโ€™s two largest economies temporarily lowering their tariff rates following a weekend meeting in Switzerland.

โ€œMarkets are reacting extremely positively to the news that the Trump administration was using tariffs as a negotiating tactic after all,โ€ Chris Zaccarelli, chief investment officer at Northlight Asset Management, said in a note emailed to The Epoch Times.

โ€œThis is a significant change for markets and should be a continuation of the healing that has happened since the April 2nd tariffs were paused for 90 days.โ€

The United States will lower its tariffs on Chinese imports to 30 percent from 145 percent. In exchange, the Chinese regime will cut its levies on U.S. goods to 10 percent from 125 percent.

Beijing will also remove its nontariff trade barriers, U.S. President Donald Trump confirmed to the media.

A deal has yet to be finalized.

โ€œWe have to get it papered,โ€ Trump told reporters on May 12. โ€œBut theyโ€™ve agreed to open up China.โ€

In an interview with CNBCโ€™s โ€œSquawk Boxโ€ on May 12, Treasury Secretary Scott Bessent confirmed that he will be meeting with Chinese officials โ€œin the next few weeksโ€ and โ€œavoid the upward tariff pressure.โ€

โ€œWe have a process now,โ€ Bessent said. โ€œWe have a meeting mechanism. We loosely christened it the โ€˜Geneva Mechanism.’โ€

This latest development occurs days after the United States announced a trade agreement with the UK, which lowers levies on various products and boosts reciprocal market access for several industries.

Byย Andrew Moran

Read Full Article on TheEpochTimes.com

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