- US stock futures surged Sunday after officials announced a framework for a US-China trade deal, signaling a potential end to escalating economic tensions.
- The agreement is expected to prevent a devastating tariff hike, which could have reached 157% on Chinese goods.
- Global markets reacted with strong optimism, with major indices in Japan, South Korea, and Hong Kong posting significant gains.
- President Donald Trump and Chinese leader Xi Jinping are scheduled to meet this Thursday, where the deal could be finalized.
Global Markets Breathe a Sigh of Relief
Investors across the globe are showing renewed confidence as US stock futures and Asian markets climbed on news that the United States and China have reached a framework for a trade agreement. The breakthrough, announced Sunday, has seemingly pulled the world’s two largest economies back from the brink of a severe trade escalation.
As of Sunday evening, Dow futures were up 0.65%, S&P 500 futures rose 0.74%, and Nasdaq futures saw a significant 0.92% jump. This positive momentum follows a strong market performance last week, where the Dow closed above 47,000 for the first time, fueled by expectations of another interest rate cut from the Federal Reserve.
The optimism was not limited to the US. In Asia, markets opened Monday with a strong rally. Japan’s Nikkei 225 index rose 1.9%, South Korea’s Kospi leaped 2.4%, and Hong Kong’s Hang Seng index traded 1.28% higher in early hours.
Averting an Economic Disaster
The potential deal comes as a massive relief, likely averting a threatened tariff hike that would have crippled trade relations. Tensions had revved up earlier this month, leading to a massive market sell-off after China threatened to restrict exports of critical rare-earth minerals and the US responded with threats of further duties.
The Framework of the Deal
While full details of the framework have not been released, Treasury Secretary Scott Bessent expressed strong optimism about the agreement. “I think we’ve reached a substantial framework for the two leaders who will meet next Thursday … that tariffs will be averted,” Bessent stated on ABC’s “This Week.” He also indicated that the US anticipates a “deferral” on China’s threatened rare-earth export controls, a critical component for American electronics manufacturing.
High-Stakes Diplomacy
The final details are expected to be ironed out when President Trump meets with Chinese President Xi Jinping this Thursday in South Korea. The meeting will cap off Trump’s diplomatic tour of Southeast Asia. On Saturday, Trump hinted at a positive outcome, suggesting there was a “very good chance of making a very comprehensive deal.”
Relief for the US Economy
The prolonged tariff war has had widespread effects on the American economy, impacting everything from consumer prices to manufacturing. Among the hardest hit have been American farmers. The new deal is expected to provide a much-needed break for soybean farmers, who saw their largest customer disappear. China, which purchased $12.5 billion in American soybeans in 2024, has not made any purchases since May, according to recent data. The restoration of this trade relationship is a critical component for the agricultural sector’s recovery.