The 90-day cease-fire, struck by Presidents Donald Trump and Xi Jinping at the G-20 summit over the weekend, sent stocks higher in Monday's trading session on renewed hope that a deal would be made in the three-month window. The market got an additional boost on news that China may make significant concessions as a gesture of good will.
"If you want to understand what's working in this market, you need to think like a Chinese bureaucrat — not like a portfolio manager — a Chinese bureaucrat who's trying to make President Trump happy," Cramer said Monday on "Mad Money." "If China wants to show President Trump some good faith, what can they do?"
First, China will likely spend more money on U.S. agriculture products, raising grain prices, giving farmers more money to spend on supplies and thus sending the stocks of agriculture machinery makers like Deere & Co. higher, he said.
"Don't think like a portfolio manager. Think like a Chinese bureaucrat. A plane order to a U.S. company versus, say, Airbus, would give the president a big win," he explained. "Engine and tractor orders that don't go to the Japanese and instead go to the United States are big, visible triumphs. You can just see the president having a Trump victory tour once the orders roll in."
Chinese trade authorities could also pave the way for companies like Mastercard, Visa and American Express — all of which have been trying to break into the Chinese market on their own for years — to enter China in earnest.
"They want unfettered free access. If I were China, I'd give it to them, at least one or two of them. Another big, visible win that doesn't cost them very much," Cramer said.
The "Mad Money" host noted that retailers will also benefit from the cease-fire. Not only will it give them an extra 90 days to move their manufacturing out of China, but the cancelled tariff hike — originally planned to rise from 10 to 25 percent at year end — means that retailers' earnings estimates for 2019 could be too low, he explained.
To that end, "perhaps the most exciting area" of the stock market are the dollar stores, Cramer said. Without the tariff hike, the estimates for Dollar Tree, Dollar General and Five Below are likely too low.
"Now, [Dollar General] reports [Tuesday] morning, so you can't get in that one, but Five Below is Thursday's business," he said. "I'd buy some before the quarter and pick some up after."
All in all, this shift in China's behavior could be great for U.S. stocks provided investors don't get any unwelcome surprises like a too-hot employment figure on Friday, the "Mad Money" host said.
"I'd say the president gave China 90 days to come to the table with substantial changes in the way it does business," Cramer said. Now, the successes will play out "case by case, with the best cases being the ones I just mentioned."