Market Rallies on U.S.-China Trade Deal, Pharma Stocks Slide on Trump Executive Order News 5/12/25

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Carl Quintanilla (0:59)

Market moving insight and analysis. Join Jim Cramer, David Faber and me, Carl Quintanilla on the opening bell hour of CNBC Squawk on the Street. Good Monday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, who's back. David Faber here post night of the New York Stock Exchange.

Stocks do look to soar 3% at the open as those U.S.-China trade talks bring a 90-day pause on those high tariff levels. S&P looks to approach the break-even level for the year so far. Our roadmap begins with this breakthrough in talks. The US and China agreeing to slash tariffs for 90 days. Treasury Secretary on CNBC earlier this morning says he's likely to meet with China again in the next few weeks to work on a bigger agreement.

David Faber (1:38)

Apple reportedly is considering raising prices on its iPhones this fall, but it is avoiding linking any of those increases to tariffs. And President Trump expected to sign an executive order that would be this hour of signing that order to slash drug prices by what might be, at least according to his various posts on social media, as much as 80 percent. Shares of many of the big pharma names are down this morning ahead, of course, that announcement.

Carl Quintanilla (2:06)

Let's begin with the U.S.-China trade agreement, sparking this global rally today. For 90 days, the reciprocal tariffs between both countries will be cut from 125 percent to 10 percent. The US. 20 percent duties on Chinese imports related to Fentanyl will remain in place, meaning total tariffs on China stand at about 30 percent. China tariffs on US imports are lowered to 10 This is what the Treasury Secretary had to say from Geneva earlier on Squawk.

Scott Bessent (2:33)

We have a process. Now, we have a meeting mechanism. We loosely christened it the Geneva mechanism. So, I don't know where we'll meet again. A very agreeable meeting here. We got a lot done over two days. So, I would imagine that in the next few weeks, we will be meeting again to get rolling on a more fulsome agreement.

Carl Quintanilla (2:58)

Jim Citty is calling it phase 1.5. What do you think? How are you framing this one?

Jim Cramer (3:03)

I think it's amazing. I left thinking that might be the biggest weakness in this market, would be that there would just be adversarial meeting after adversarial meeting, and we'd all be dealing with these rancor, and there could be no way that we'd ever get to where we'd have a pause like the other countries. This, to me, is a signal that there is maybe a different kind of President Trump happening. I think that Secretary Besson, as you know, David, is going to be totally in line with President Trump. But President Trump seems to be looking for less confrontational style. And this may be the beginning of what I regard as being kind of a little more politics as usual, not for Trump.

David Faber (3:43)

Really?

SPEAKER_10 (3:43)

Yes, absolutely.

David Faber (3:45)

Doesn't it feel like playbooks, sort of you go high with your ask, and then you come and you negotiate, and the whole art of the deal?

Why is this different? Okay, I mean, by the way, and also still uncertain, you know, where we end up on certain things.

Jim Cramer (3:58)

Because I'm taking this as a piece with diffusion, with the way that the semiconductors, he's trying to pull away from making so that China is as much of an adversary. So I think, yes, you've got a lot of the deal going, but you also have this, wait a second, maybe we're, maybe we ought to be more part of the council of nations. Maybe we should make it so that China, let's pull back from the idea that Taiwan could be in play. Let's pull back from the idea that there's a military solution to this, because that, and the reason I said, that was the huge bear case, David. That was the bear case on the world. Take that bear case off and just make it so it's a trade negotiation, feels very different.