Donald Trump announced on Sunday that he will be extending a deadline on new tariffs, with a China trade deal reportedly seeing “substantial progress”. Trump announced his decision on Twitter this past weekend.

The news sent Chinese stock markets upwards on Monday morning. American investors are also likely to react positively. Trade uncertainties were a leading factor in market volatility last year. This year, good news on trade has helped the stock market to grow. All major indexes have reported double digit price growth since the beginning of 2019.

Trump Confident That a Trade Deal Will be Reached

In his Sunday Tweet, President Trump said that “I am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues. As a result of these very productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!”

Investors and those interested in political news will recall that President Trump threatened to increase tariffs on Chinese imports by March 2. Tariffs on up to $200 billion worth of goods are currently set at 10%. Trump was considering raising the tariffs to 25% if a new trade deal was not agreed.

For now, it appears that the President is happy that a deal is close to being finalized. He hinted earlier this month that he would consider extending the deadline if it looked like a deal were possible.

Stocks Could Rally Even Further Thanks to Trade Confidence

The boost to Chinese stocks on Monday morning is a positive sign for U.S. investors. Some would argue that trade was the most influential factor on volatility in 2018. If the United States and China can make a long-lasting deal that facilitates commerce, then investors would see long-term sustained economic expansion for the U.S. as a real possibility.

Today, the economy is still growing, but at a noticeably slower rate than recent years. A new China deal would potentially change that. Some analysts believe that on the stock market, prices could increase by 10% or more in the weeks following the signing of a deal.

China and the United States are the world’s two largest economies. A refreshed trade agreement would be a massive political win for President Trump, who promised to create fairer trade conditions throughout his run for office.