Dow Closes Above 25,000 As China Trade War Fears Fade

Drew AngererGetty Images

Stocks rose 298 points or 1.2 percent in trading on Wall Street Monday, putting the Dow Jones Industrial Average above 25,000 for the first time since March as investors’ fear of a trade war with China eased over the weekend.

According to an article in The Street, Treasury Secretary Steven Mnuchin said that talks between the United States and China have led to a “hold” on trade hostilities.

“We are putting the trade war on hold. Right now, we have agreed to put the tariffs on hold while we try to execute the framework,” Mnuchin said in the article.

Reuters reports that the talks between the two largest economies in the world are getting results including more export from the U.S. to China.

President Donald Trump tweeted out on Monday that China will be buying a large amount of American farm produce.


“Under our potential deal with China, they will purchase from our Great American Farmers practically as much as our Farmers can produce,” the tweet said.

As both economic powers stepped away, at least for the time being, from a potentially nasty trade war in favor of more talks, markets cheered the news.

In addition to the Dow, the NASDAQ rose 40 points to 7,394 and the S&P 500 rose 20 points to 2,733 Monday.

President Trump campaigned in 2016 on ending what he said were “unfair” trade agreements with China and other nations, causing companies to leave the US, closing many manufacturing plants and leaving workers unemployed.

President Trump estimated the trade deficit between the nations at $335 billion per year, according to the Reuters article.

On March 1, he threatened to impose a $50 billion tariff on China exports.

China, in turn, threatened billions of its own tariffs on incoming U.S. products.

The dispute caused markets to drop throughout the period, but have now rebounded to within 16 points of its high before the March 1 announcement.

NEW YORK, NY - MAY 21: Traders and financial professionals work ahead of the closing bell on the floor of the New York Stock Exchange (NYSE), May 21, 2018 in New York City. Stocks traded higher on Monday following weekend comments by U.S. Treasury Secretary Steven Mnuchin saying that the prospect of a trade war between the U.S. and China was 'on hold' after an agreement was reached to suspend tariff threats.
Featured image credit: Drew AngererGetty Images

In the Reuters article, a Morgan and Stanley economist estimated the agreement would bring $60-$90 billion more in exports during a period of years, but less than the $200 billion trade deficit deduction that President Trump initially demanded.

Developments have allowed both nations to claim a victory, with China accepting more United States exports and the Chinese Government the ability to say that they did not surrender to President Trump’s demands.