Treasury Secretary Scott Bessent touted "substantial progress" after lengthy weekend U.S.-China trade talks in Geneva. The White House signaled a deal but gave no details.
The goal of the China talks was to de-escalate a trade war that is set to hammer the world's two largest economies. The outcome has big stock market implications.
U.S.-China Trade Talks
Bessent and U.S. Trade Rep. Jamieson Greer met with Vice Premier He Lifeng, President Xi Jinping's economic right-hand man, and other top Chinese officials over Saturday and Sunday. They were the first public, face-to-face meetings since President Donald Trump imposed 145% tariffs on China and Beijing responded with 125% tariffs on most American goods and rare earths export controls.
In brief remarks Sunday, Bessent cited "substantial progress" and "productive" discussions. Greer told reporters that "it's important to understand how quickly we were able to come to an agreement, which reflects that perhaps the differences were not as large as maybe thought."
The White House website touted "U.S. Announces China Trade Deal in Geneva," giving a strong signal, but the actual release only included comments from Bessent and Greer.
Neither Bessent nor Greer actually announced a deal, despite some hints. They did say they will provide more details Monday.
Chinese Vice Premier He also cited "substantial progress, adding that the U.S. and China agreed to establish a trade consultation mechanism for further negotiations. State-run media Xinua said the U.S. and China would release a joint statement Monday.
The real question for investors is whether there will be big tariff reductions in the short run to de-escalate the trade war while more substantive negotiations go on.
Various reports late last week suggested the U.S. might cut China tariffs from to 50%-60%, but Trump posted Friday that 80% "seems right."
Trump did note that the China tariff decision would be up to Bessent, signaling flexibility.
The 50%-60% range would likely be the outer limit to allow for substantial U.S.-China trade.
China exports to the U.S. plunged 21% in April vs. a year earlier, according to official data Friday. But overall exports swelled 8.1% in dollar-denominated terms, as Beijing shifted trade to Southeast Asia, Latin America, Europe and Africa. Some of that trade, especially to Asia, may be redirected to the U.S., sidestepping much of the tariffs.
Still, U.S. port activity is plunging, with that starting to have a major impact for trucking and rail operators, as well as warehouses. Over the next several weeks, retailers and industrial firms will feel the pinch as stockpiles run out. Meanwhile, Chinese factories are taking a hit.
Both the Trump administration and the Chinese government have sought to claim that they have the upper hand in the trade war. But both sides have an incentive to de-escalate.
Stock Market Eyes China Trade Talks
Dow Jones futures jumped following U.S.-China trade talks, as investors hope the positive words lead to a big tariff reduction.
The S&P 500 and other major indexes fell slightly last week, trading above their 50-day moving averages and below their 200-day lines. Leading stocks showed strength.
Chinese giants Alibaba and Tencent report earnings this week. Walmart kicks off retail earnings.
Five Stocks Near Buy Points Amid Trade War Hopes
Other Trump Tariff News
On Thursday, Trump announced a preliminary trade deal with the United Kingdom. That will trim some duties but leave a 10% baseline tariff on British goods. That's notable because the U.S. has a trade surplus with the U.K.
The U.K. accord reinforces expectations that the Trump administration plans to keep 10% tariffs across the board, with much-higher duties for China.
Late Friday, the Trump administration said it's probing whether imported aircraft, jet engines and parts are a national security threat. That's a step to new tariffs on commercial aerospace.
That could affect European aerospace giant Airbus, but also Boeing, which has a complex global supply chain.
Trump has also signaled the sector tariffs on pharmaceuticals and electronics will be coming.
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