Markets cheered the truce
Risk‑on momentum followed the tariff pause: one tally shows the S&P has risen ~11% across 12 sessions since the truce, while the Dow gained roughly 1,000 points and the S&P jumped about 2.6% on the announcement in another snapshot. ( ).
Wall Street rallied after Washington and Beijing agreed on May 12, 2025 to cut tariffs for 90 days and reopen trade talks. (whitehouse.gov) The deal lowered U.S. tariffs on Chinese goods to 30% from 145% for the pause period, while China cut its tariffs on U.S. goods to 10% from 125%. The changes were set to take effect by May 14, 2025, under the joint statement released after talks in Geneva. (whitehouse.gov) Stocks reacted immediately on May 12. The S&P 500 rose 3.3%, the Dow Jones Industrial Average gained 1,161 points, and the Nasdaq Composite climbed 4.4% as investors priced in lower odds of a near-term trade shock. (cbsnews.com) The rally followed an even larger burst on April 9, 2025, when President Donald Trump announced a separate 90-day pause on higher tariffs for many countries while raising China’s rate. That day, the S&P 500 jumped 9.5% and the Dow gained 2,962.86 points. (money.usnews.com) Tariffs are taxes on imports, so traders read a pause as a sign that fewer new costs may hit companies, supply chains, and consumer prices in the next three months. Reuters reported that the U.S.-China fight had brought nearly $600 billion in two-way trade close to a standstill before the May truce. (usnews.com) The market’s move was also a shift away from safety trades. Reuters reported that the dollar strengthened and gold fell on May 12 as investors moved back into stocks and other riskier assets. (kitco.com) The relief was broad, but it was not a full reset. The Trump administration kept a 20% fentanyl-related tariff in place, which is why the effective U.S. rate on many Chinese imports stayed at 30% during the truce instead of falling to 10%. (cnbc.com) Officials and investors also treated the agreement as temporary. Reuters reported that the 90-day pause left the core disputes in place, including the U.S. trade deficit with China and Washington’s demands for more Chinese action on fentanyl. (usnews.com) That is why the market response looked like relief rather than resolution. Stocks cheered the truce because the next deadline moved farther out, not because the trade fight was settled. (usnews.com)
