Stock markets roared on the news of lower tariffs between America and Communist China, along with a 90-day pause.

The major indexes are now above their November 5 Election Day levels. And higher than their April 2 “Liberation Day” level.

It seems like — tariffs down, stocks up.

Authorized by President Trump and negotiated by Secretary Bessent and the U.S. trade representative, Jamieson Greer, America has gone to 30 percent tariffs from 145 percent tariffs, and China has gone to 10 percent from 125 percent.

To some extent, that’s a bit misleading, because the original United States-China Phase One Trade Deal imposed a 25 percent tariff on about half of China imports, mostly related to technology. So, for that grouping, it’s 30 percent plus 25 percent — equaling 55 percent.

Mr. Trump reminded us of this when he said, “that doesn’t include the tariffs that are already on … and it doesn’t include tariffs on cars, steel, aluminum, or tariffs that may be imposed on pharmaceuticals.”

The president also reminded us that the Phase One Deal for market access for American exports — such as agriculture, manufacturing, and energy — was never implemented.

Indeed, the whole Phase One Deal — including ending the theft of intellectual property, the forced transfer of technology, and outright American ownership of United States businesses in China — none of that was agreed to at Geneva. 

As the president said, “it’s gonna take a while to paper it.”

In fact, it took about two and a half years in the first term.

And the fentanyl problem was never addressed by China, despite its promises.

And, of course, many believe it’s the Biden administration that failed to implement Phase One, and once China saw that President Biden was elected, they decided to discard the whole Phase One Trade Deal altogether. We’ll see if we can get it back.

Dan Clifton of Strategas now estimates the amount of fiscal drag from tariffs in static terms has fallen to $260 billion, from an estimated peak of $800 billion. And the tariff de-escalation significantly reduces the risks of recession and inflation.

That’s a key point helping to drive stocks skyward.

Yet the so-called reset is really a tariff reset, not yet a real trade policy reset.

All that said, Mr. Trump is a master negotiator.

He’s pausing tariffs, and reducing tariffs. His tariff pauses and reductions are a nod to small businesses and others worried about tariff shock for their customers.

Yet, let’s not forget, his policy mission of reciprocal fair trade and his goal of reordering a broken global trading system are still very much in place.

Mainstream elites hate tariffs.

Mr. Trump, on the verge of signing several more large deals, however, is showing those elites just how effective the tariff strategy can be.

From Mr. Kudlow’s broadcast on Fox Business Network.