Xi Jinping’s decision to stand his ground against Donald Trump paid dividends to the Chinese leader Monday. After two days of high-stakes talks in Switzerland, trade negotiators from the world’s biggest economies announced a massive if temporary de-escalation of tariffs, with the US slashing duties on Chinese products to 30% from 145% and Beijing dropping its levy on most goods to 10%.

The US administration began to retreat on promised levies and make public entreaties to Beijing shortly after markets nosedived in response to Trump’s “reciprocal” tariff rollout on April 2. The retaliation that followed the announcement had taken duties to levels that for many companies effectively blocked trade, causing widespread uncertainty and fueling warnings of a self-induced US recession.

The dramatic reduction in tariffs exceeded expectations in China and sent the dollar and stocks soaring—providing some much-needed market relief for the US president, who is facing pressure as inflation looks set to speed up at home. China equities also surged as the deal—though only a 90-day delay—ended up meeting nearly all of the Chinese president’s core demands. The “reciprocal” tariff for China, which Trump set at 34%, has been suspended—leaving America’s top rival with the same 10% rate that applies to US allies like the UK.

“This is arguably the best outcome that China could have hoped for—the US backed down,” said Trey McArver, co-founder of research firm Trivium China. “Going forward, this will make the Chinese side confident that they have leverage over the US in any negotiations.” —Natasha Solo-Lyons and David E. Rovella

What You Need to Know Today

Though a temporary truce, that didn’t stop markets from letting loose like the trade war was over, with the Nasdaq shooting up more than 4% and the S&P 500 more than 3%. Traders also lowered their bets on the Federal Reserve’s interest-rate cuts this year, pricing in just two reductions for 2025. Swaps that track upcoming central bank meetings showed just 55 basis points of easing by December, down from near 75 basis points last week. Traders still see the first quarter-point cut coming in September. Here’s your market’s wrap.

A US House of Representatives draft bill to renew GOP tax cuts pushed through in 2017 calls for increasing state and local tax deductions to $30,000 for couples—but is said to limit the write-off to households earning $400,000 or less. Individuals earning up to $200,000 could claim $15,000 in SALT deductions under the proposal.

The language to raise the current $10,000 cap falls short of what many lawmakers in high-tax states, which tend to lean Democratic, have advocated. The 2017 tax cut bill, signed by Trump in his first term, largely benefitted corporations and the wealthy. But it also scaled back SALT deductions in a move Democrats said at the time was meant to punish blue states. Now, Republicans in those states have been pushing their razor-thin majorities in both houses of Congress to loosen the cap.

SoftBank’s plans to invest $100 billion in artificial intelligence infrastructure in the US have slowed, with economic risks stemming from Trump’s tariffs holding up financing talks. SoftBank founder Masayoshi Son and OpenAI co-founder Sam Altman unveiled the “Stargate” project in January with promises to begin deploying $100 billion “immediately” and raise that figure to around $500 billion over time. But more than three months later, SoftBank has yet to develop a project financing template or begin detailed discussions with banks, private equity investors and asset managers.

Hamas freed the last living American citizen held hostage in Gaza following talks between the US and the militant group. The US engaged with Hamas to help secure his release while Israel appeared to have little say over the negotiations and was informed of the outcome by the US on Sunday evening. Edan Alexander is the first hostage to be released since a truce in the Israel-Hamas war expired in early March, when Israeli resumed air strikes on Gaza. Since that time, Israel also has imposed an unprecedented aid blockade. Relief agencies warn that famine is imminent, with acute malnutrition spreading throughout the Gaza Strip. 

California Governor Gavin Newsom called on cities in his state to ban and remove homeless encampments from sidewalks, bike paths and other public property, ratcheting up his effort to tackle the crisis. The Democratic governor on Monday released details of a model ordinance that he said California cities can use for removing homeless encampments. It’s backed in part by $3.3 billion in funding approved by voters in 2024 as part of Proposition 1, which expanded behavioral health housing and treatment for homeless people in the state.

Apple is planning to use artificial intelligence technology to address a frequent source of customer frustration: the iPhone’s battery life. The company is planning an AI-powered battery management mode for iOS 19, an iPhone software update due in September. The enhancement will analyze how a person uses their device and make adjustments to conserve energy.

The move continues Apple’s strategy of integrating AI into its core features. The first version of Apple Intelligence, which rolled out last year, added tools for text editing and improving writing anywhere text can be entered, as well as features to summarize notifications, generate custom emoji, remove unwanted elements from images and create sketches.

What You’ll Need to Know Tomorrow

For Your Commute

The US economy entered 2025 firing on all pistons, but now that machine is sputtering. Many economists forecast that Trump’s trade war will