U.S. and China Pause Sky-High Tariffs for 90 Days, But U.S. Consumers Will Pay Higher Prices

Barry Adams
12 May, 2025
New York City

Wall Street indexes soared on Monday amid optimism about US-China trade talks. 

The S&P 500 index jumped more than 2%, and the Nasdaq Composite advanced nearly 3%, as investors reviewed the preliminary agreement that lacked details.

Over the weekend, trade representatives of the U.S. and China gathered in Switzerland and hammered out a preliminary agreement to pause reciprocal tariffs for 90 days. 

The U.S. president launched his global tariff campaign, which placed import taxes on all shipments, and placed the heaviest duties on goods arriving from China. 

Chinese Vice Premier He Lifeng and U.S. Secretary of Treasury Scott Bessent agreed to roll back the 145% tariffs announced by Donald Trump and China's retaliatory tariff of 125%. 

Both sides claimed a victory and said they have agreed on a trade deal framework, and they are hoping that a wider deal could be worked out over the next three months. 

Global financial markets whiplashed after the U.S. president launched his tariff war, targeting China, Japan, Mexico, and Canada.

The S&P 500 index plunged and touched the bear market territory on April 8 after Donald Trump announced additional tariffs targeting China and ramped up his rhetoric. 

Despite the tough and shrill tone of Trump's rhetoric, China stood its ground and forced the U.S. president to roll back his sky-high tariff, contrary to his claims in early April.  

European markets jumped between 0.6% and 1.4%, following the surge on Wall Street  in Monday's trading. 

 

U.S. Stock Movers 

Pharmaceutical stocks turned lower after the U.S. president vowed to sign an executive order that could cut prices between "30% and 80%."

Pfizer dropped 0.3% to $22.17, Merck & Company declined 0.7% to $75.52, Eli Lilly dropped 1.9% to $720.0, Novartis AG declined 2.2% to $106.21, and Teva Pharmaceutical Industries declined 0.2% to $16.91.