Stock market surges after bombshell China tariff announcement

12 May 2025, 21:18 · The Fresno Bee

The stock market surged higher on Monday after President Donald Trump released details surrounding progress on U.S.-China trade talks.

Over the weekend, U.S. Treasury Secretary Scott Bessent, U.S. Trade Representative Jamieson Greer, and Chinese officials, including China's Vice Premier He Lifeng, gathered in Switzerland to discuss options for ending a tariff-driven trade war that has effectively shut down all trade between the two economic giants.

The meeting went well. Worries that talks could break down if either side dug in heels appear overblown, given a significant pause in U.S. and China tariffs announced on May 12.

President Trump announced that recpiprocal tariffs totalling 145% would be reduced to 10% and China tariffs on U.S. goods would be reduced from 125% to 10%. A 20% fentanyl tariff on China will remain in place for now.

The easing of trade tension was welcome on Wall Street. The S&P 500 and Nasdaq Composite skyrocketed on the news, rising 3.3% and 4.35%, respectively.

The stock market surged higher on May 12 on word that China and the U.S. would reduce their tariff rates for 90 days.

ANGELA WEISS/Getty Images

The stock market finds its mojo following tariff progress

Tariffs have become a cornerstone of the Trump administation, but markets response to tariffs raised considerable debate over whether resulting inflation could derail the U.S. economy, triggering stagflation or worse, a recession.

The stock market, despite Donald Trump campaigning on promises to institute tariffs, was surprised by harsher-than-expected import taxes this year, contributing to a dramatic sell-off that at its worst, saw the S&P 500 down 19% from its February peak.

The sell-off was triggered by Trump instituting a 25% tariff on Canada and Mexico in February, and a wave of tariffs in early April, including 25% tariffs on autos, a 10% baseline tariff on all imports, and reciprocal tariffs on individual countries ranging up to 46% for Vietnam.

The market, however, found its footing on April 9, when President Trump paused most reciprocal tariffs for 90 days for trade negotiations.

Since then, the S&P 500 and Nasdaq have notched double-digit percentage gains, recovering to levels last seen before the early April tariff announcement.

The gains have come despite an escalation of trade tensions with China, who was excluded from the reciprocal tariff pause because it had retaliated with its own tariffs. The tariff tit-for-tat eventually led to a 145% tariff on Chinese exports to the U.S. and 125% on U.S. exports to China.

Those sky-high levels effectively shuttered trade between the U.S. and China, leading to widespread fear of product shortages and inflation on just about everything from clothing to cars.

Those fears retreated significantly today following the White House's announcement that it will reduce import taxes to 30%, comprising the 20% fentanyl tariffs and the 10% recirprocal tariff. China's 125% tariff will fall to 10%. The new tariff rates will be effective on May 14.

The news prompted a widespread rally in stocks, particularly within hard-hit sectors like technology and retail.

Nvidia, a leader in semiconductor chips used for artificial intelligence, saw its stock price jump 4.75%. Alphabet rose 3.7%. Apple stock was up 6%. Tesla's stock price rose 6.8%.

In retail, Target, which sources many products overseas and gets a smaller percentage of its sales from grocery, was up 4.9%. Similarly, Kohl's stock surged 13% while Macy's was up 6.%. Nike, which relies heavily on imports from Asia, saw its share climb 7.3%.

President Trump referered to the pause as part of a "total reset with China."

"The talks in Geneva were very friendly," said Trump. "The relationship is very very good.

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This story was originally published May 12, 2025 at 2:18 PM.