Stock futures surged Sunday evening, as US Treasury Secretary Scott Bessent announced that “substantial progress” had been made in high-stakes trade negotiations with China. The news injected a burst of optimism into markets, signaling a potential thaw in the trade tensions that have dominated the economic landscape.
The Dow Jones saw a strong uptick of 1.03%, climbing 427.66 points. Similarly, S&P 500 futures surged by 1.31%, or 75.8 points, while the Nasdaq Composite futures rose by 1.71%, adding 348.19 points as of 7:45 p.m. ET.
Tensions Cool in Geneva Amid Heavy Tariffs
Bessent, alongside US Trade Representative Jamieson Greer, addressed the media after a critical round of talks held in Geneva, Switzerland, with Chinese officials. The negotiations follow a tumultuous period after President Donald Trump imposed sweeping tariffs on most Chinese goods, triggering retaliatory measures from China.
In April, the United States slapped 145% tariffs on Chinese imports, while China responded with its own 125% levies on American products.
After weeks of volatility, the news of significant progress in these talks was a welcome development for Wall Street. Investors seem hopeful that a potential trade deal could provide much-needed stability and lift global and US economic prospects.
Hope for a Deal, But Tariffs Likely to Stay
Despite the positive outlook, a full resolution is still a work in progress. The trade talks have been fluid, with unpredictable shifts in tariff policy causing confusion among consumers and businesses alike. However, US officials are expected to unveil a more detailed framework for the trade agreement on Monday morning.
While tariffs are likely to persist, the expectation is that they will not remain at the extreme levels that were put in place last month. US Commerce Secretary Howard Lutnick made it clear on CNN’s “State of the Union” that the United States is firm on keeping tariff rates above 10%, even as it negotiates with other countries. In fact, the recently concluded trade deal with the United Kingdom maintains a 10% tariff rate, a level Lutnick confirmed would remain for the “foreseeable future.”
The Long-Term Effects Still Unclear
Despite the diplomatic progress, the broader economic picture remains murky. The trade war has caused ripple effects that have already been felt in the form of declining consumer confidence and the first quarterly contraction of the US gross domestic product since early 2022. Analysts from Goldman Sachs have predicted that inflation could double to 4% by the end of the year due to the wide-reaching impacts of the tariffs.
In addition, the long-term effects of these tariff policies are yet to unfold. With tariffs still in place, consumers could face higher prices on imported goods, while store shelves may eventually show signs of shortages. Ships arriving at US ports from China are now the first to be hit with the tariffs. At the Port of Los Angeles, the number of imports from China has plummeted by more than 50%, as noted by Gene Seroka, the executive director of the port.
The road to full trade resolution is still uncertain, but for now, the stock market’s positive response indicates cautious optimism. The coming weeks may reveal whether these early gains can be sustained or whether the broader challenges of trade will once again send markets into a tailspin.
