After President Donald Trump placed up to $60 billion worth of tariffs on China last week, investors worried that the Chinese government would retaliate in kind.
China's first move was to announce $3 billion in tariffs on mostly agricultural U.S. goods like wine and fruit, a move many took as a sign that China was afraid of escalation.
On Saturday, Chinese officials went a step further, announcing in the state-owned People's Daily that U.S. companies including Apple, Intel and Boeing would be among the biggest losers in a U.S.-China trade war — a serious possibility given their sprawling China businesses.
"So the market breathed a sigh of relief when the White House put good cop, Treasury Secretary Steve Mnuchin, on Fox this weekend and [he] talked about progress in trade talks, ... saying perhaps the Chinese would show more respect for intellectual property [and] possibly lower tariffs on U.S. exports," Cramer said.
If U.S. policymakers are able to strike a deal with China to negotiate an outcome that benefits the United States and avoids a trade war, it would be a win for the market, Cramer continued.
"That's the essential component of this rally," he said. "An extremely negative story on Friday becomes a hopeful story on Monday, especially if we dodge the Apple, Intel and Boeing bullets."