The US and China reached a significant de-escalation in their trade war, leading to a surge in US stock markets. The Dow Jones increased by 1,161 points (2.81%), the S&P 500 rose by 3.26%, and the Nasdaq gained 4.35%, marking its exit from a bear market. The agreement involves reducing tariffs by 115 percentage points, with Chinese goods now facing at least 30% tariffs and US exports a minimum of 10%, down from previous rates of up to 145% and 125%. The effective tariff rate for Chinese goods is estimated at around 50%, considering previous tariffs. This move is viewed as a positive step toward stabilizing the economy, reducing recession risks, and improving market sentiment. Investors responded by increasing risk assets, boosting stocks in tech, luxury, and automaker sectors, while safe-haven assets like gold and US Treasuries declined. US Treasury Secretary Scott Bessent highlighted that the deal is a temporary pause, with plans to diversify supply chains and reduce dependence on China for critical goods. The agreement also includes mechanisms to prevent future tariff hikes, signaling that the worst of the trade war may be over. Economists and officials see this as a historic start to improved US-China relations, potentially preventing further supply shocks and fostering a more resilient global economy.