The U.S.-China tariff truce announced on 12 May 2025 defused months of escalating trade tension and set off one of Wall Street's strongest sessions of the year. After a weekend of negotiations in Geneva, the two sides agreed to roll back reciprocal tariffs for an initial 90-day window, sparking a broad equities rally and a sharp technology surge. This is what the deal contained and how global markets responded.
What the U.S.-China Tariff Truce Contained
Following talks in Geneva, Switzerland, Washington and Beijing agreed to lower their reciprocal tariffs by 115 percentage points for an initial 90-day period. U.S. duties on Chinese goods fell from 145% to 30%, a level that still included a 20% tariff tied to fentanyl, while China cut its levies on American imports from 125% to 10%. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer led the U.S. delegation alongside Chinese Vice Premier He Lifeng, and both governments agreed to establish a mechanism for continued talks. The pause marked a sharp de-escalation from the tit-for-tat increases of early 2025.
Equities Rally Lifts the S&P 500 and Dow
Wall Street reacted at once. The S&P 500 climbed 3.26% to close at 5,844.19, while the Dow Jones Industrial Average jumped 1,160.72 points, or 2.81%. The Nasdaq Composite led the major benchmarks with a 4.35% gain, settling at 18,708.34, and the Nasdaq 100 entered a fresh bull market. The advance came as investors scaled back fears that steep tariffs would tip the U.S. economy into recession. By the close, the S&P 500 had recovered most of its 2025 decline, erasing the loss entirely in the following session.
Big Tech Leads the Surge
Megacap technology shares drove the rally, reflecting their heavy exposure to Chinese supply chains and customers. Amazon rose 8.1% and Meta Platforms gained 7.9%, while Tesla climbed 6.8%, lifting its market value back above $1 trillion. Apple added 6.3%, and Nvidia advanced 5.4%, leaving the chipmaker valued just under $3 trillion. The rotation out of havens was just as pronounced: gold retreated and Treasury yields rose as capital shifted from defensive positioning into risk assets, a sign of how completely the truce reset sentiment within a single session. The moves showed how sensitive the sector had become to trade policy: Tesla sources parts and batteries from China, and a substantial share of goods sold on Amazon originates there. Investors read the truce as a direct boost to firms that manufacture, assemble or sell heavily in China.
What the Truce Means for Traders
A single policy announcement reshaped sentiment across equities, currencies and commodities within hours, a reminder of how quickly headline risk can move markets. The 90-day window left the truce explicitly temporary, keeping the door open to renewed volatility if the talks stalled. For anyone following index and currency markets, episodes like this highlight the value of tracking the economic calendar, sizing positions around known event dates, and separating a durable trend from a sharp but conditional relief rally. Confirmation, rather than anticipation, tends to define the more sustainable moves.
Daily market analysis by BCM Markets.