Global markets rally after U.S. and China cool trade tensions

Global stocks surged Monday after the U.S. and China agreed to de-escalate tariffs that had effectively frozen trade between the world’s largest economies.

Dow Futures on Wall Street soared after the White House said both sides had agreed to drastically reduce tariffs for 90 days. 

S&P 500 and Nasdaq futures jumped over 3% and 4%, respectively, ahead of the opening bell.

Stock markets in Asia rallied and Europe’s Stoxx 600 index rose 1% after U.S.-China talks in Switzerland resulted in an agreement to slash levies and pursue a broader agreement.

“I would imagine in the next few weeks we will be meeting again to get rolling on a more fulsome agreement,” Treasury Secretary Scott Bessent told CNBC’s “Squawk Box.”

Under the agreement, China agreed to reduce its tariff on U.S. goods from 125 % to 10% and the U.S. agreed to slash its levy on China from 145% to 30%.

The higher U.S.-imposed levy is due to a previous, 20% tariff Mr. Trump put on Chinese goods because of the fentanyl crisis.

The agreement said both sides recognize “the importance of a sustainable, long-term, and mutually beneficial economic and trade relationship,” and set up a mechanism for future talks between Chinese Vice Premier He Lifeng and Mr. Bessent and U.S. Trade Representative Jamieson Greer.

The world’s largest economies were locked in a bitter trade war after Mr. Trump unveiled an April 2 “Liberation Day” plan that imposed hefty tariffs on countries that sell plenty of products to U.S. consumers but don’t buy nearly as much from American producers.

China retaliated, resulting in sky-high tariffs that neither side viewed as sustainable.

The standoff caused factory output in China to slow down while U.S. retailers warned of empty shelves of higher prices as they passed along the added costs from tariffs.

Ngozi Okonjo-Iweala, the director-general of the World Trade Organization, praised negotiators for making progress.