A breakthrough agreement between the United States and China to ease tariffs sent shockwaves through global markets this weekend, sparking a major rally on Wall Street and beyond.

Following high-stakes talks in Switzerland, the two economic powerhouses announced they would slash tariffs on each other’s goods—a move that instantly boosted investor confidence.

According to CNN, Dow Jones futures jumped more than 1,100 points, while the S&P 500 and Nasdaq climbed 3% and 4%, respectively.

“This is a big win for the markets,” said analysts at Wedbush, speaking to The Wall Street Journal. “The progress made in these Swiss negotiations exceeded even the most optimistic expectations.”

Tai Hui, Chief Market Strategist for Asia Pacific at JPMorgan Asset Management, added: “The size of the tariff cuts was bigger than predicted. We’re likely to see a shift back to a ‘risk-on’ investing environment in the short term.”

Markets Cheer, But Analysts Urge Caution

While the reaction was overwhelmingly positive, experts noted that this isn’t a final resolution—yet.

“We believe the worst of the uncertainty around trade is behind us,” wrote UBS Head of Fixed Income Kurt Reiman in a note to clients. “But we expect market volatility to continue.”

Reiman predicted that the average U.S. tariff rate on goods from countries other than China would fall to around 15% by the end of the year.

Adam Crisafulli, head of Vital Knowledge, told CBS that even though the reduced tariffs are set to last just 90 days, “the announcement is a very clear positive surprise for the markets.”

A Step Toward a Larger Deal

The White House released a statement Sunday detailing what it called a historic agreement between the U.S. and China. The deal comes after a years-long tariff war sparked by former President Donald Trump’s efforts to rebalance trade between the two nations.

“On the heels of our recent deal with the United Kingdom, President Trump has now reached an agreement with China,” the White House fact sheet reads. “China will lower tariffs, end retaliation, and we will retain baseline tariffs while opening the door for greater U.S. market access moving forward.”

According to the document, both countries agreed to reduce tariffs by 115% and retain an additional 10% tariff. The cuts will officially go into effect Wednesday, May 14. However, for now, the deal only holds for a 90-day trial period.

Still, the markets responded immediately. The Dow soared 1,000 points at Monday’s opening bell.

Details of the Deal

As outlined in the fact sheet:

• China will eliminate the retaliatory tariffs it imposed since April 4, 2025, and pause its 34% tariff on American goods for 90 days (keeping a 10% tariff during the pause).

• The U.S. will roll back additional tariffs imposed on April 8 and 9, 2025, but will keep in place all tariffs that existed before April 2, including Section 301 and Section 232 tariffs, those related to the fentanyl crisis, and other Most Favored Nation duties.

• The U.S. will also suspend its own 34% reciprocal tariff during this trial period.

Both countries plan to continue negotiations during the 90-day window in hopes of reaching a longer-term agreement.

A Side Focus: Fentanyl Crisis

The agreement also touches on a key issue for the U.S.: fentanyl. American officials, including Trump and previous administrations, have long accused China of supplying the precursor chemicals used by drug cartels in Mexico to produce fentanyl, which is then smuggled into the U.S.

The new deal includes measures aimed at addressing this ongoing crisis, though specific details on enforcement remain to be seen.

Bottom Line

The tariff rollbacks mark a major de-escalation in U.S.-China trade tensions and could be the start of a more stable economic relationship. While the agreement is temporary, it sent a strong signal to investors—and offered a much-needed boost to global markets.

Still, with only 90 days on the clock, all eyes will be on how the two nations handle the next phase of negotiations.