The US and China have agreed a breakthrough temporary cut to the tariffs they impose on each other’s exports.

Speaking in Geneva, US Treasury Secretary Scott Bessent said both countries would slash their reciprocal tariffs by 115 per cent for 90 days.

Bessent told reporters that ‘both sides showed great respect’ during their talks, and that ‘we both have an interest in balanced trade’. 

Following the announcement, global markets experienced significant gains. Hong Kong surged by over three percent, while Shanghai also saw a strong buying interest. Additionally, markets in Tokyo, Sydney, Seoul, Taipei, and Wellington were all positive, and the stock markets in London, Paris, and Frankfurt each climbed by more than one percent.

This news was released after China and the US held trade discussions in Switzerland over the weekend, which Bessent previously characterized as ‘productive and constructive’.

This pivotal meeting marked the first engagement between the two nations since US President Donald Trump imposed significant tariffs on Chinese goods entering the United States in January.

Trump had imposed a staggering 145 per cent tariff on Chinese imports, while Beijing retaliated with a 125 per cent levy on some US products.

The mega tariffs caused turmoil in the financial markets and sparked fears of a global recession, however, the US tariffs on Chinese imports will now be cut to 30 per cent for 90 days, while Chinese tariffs on US imports will be cut to 10 per cent for the same period of time. 

US President Donald Trump speaks during an event to announce new tariffs in the Rose Garden at the White House on April 2, 2025, in Washington

Speaking in Geneva, US Treasury Secretary Scott Bessent said both countries would slash their reciprocal tariffs by 115 per cent for 90 days

US Secretary of the Treasury Scott Bessent and US Trade Representative Jamieson Greer address the media after trade talks with China in Geneva, Switzerland, May 11, 2025

The two sides also agreed to establish ‘a mechanism to continue discussions about economic and trade relations,’ led by Chinese Vice Premier He Lifeng and US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer, according to the statement. 

‘These discussions may be conducted alternately in China and the United States, or a third country upon agreement of the Parties. 

‘As required, the two sides may conduct working-level consultations on relevant economic and trade issues,’ it added.

The US side has also suggested that they have agreed a ‘very good mechanism’ to avoid unfortunate escalations with China over trade in future. 

Prior to this morning’s announcement, both sides had talked up a potential deal, though no detail had been announced.

Chinese media described the meeting between China and the US as bringing about a mechanism for further talks through having agreed to establish ‘an economic and trade consultation mechanism’, while President Trump said the pair had ‘a total reset negotiated’.

But the news was received positively by Asian stock markets on Monday as major indexes shot up.

Before the 90-day pause announcement in China, the Shanghai Composite stock index rose 0.7 per cent, the Shenzhen Component gained 1.7 per cent, and Hong Kong’s Hang Seng index was up 1.2 per cent.

In countries across Asia, benchmark stock indexes also rose.

Korea’s Kospi grew 1.1 per cent, Japan’s Nikkei was up 0.8 per cent, while India’s Nifty 50 index of most valuable companies gained over three per cent. 

Trump imposed the largest set of tariffs on China when he announced a 145 percent tax on most goods coming from Beijing. Pictured: Chinese President Xi Jinping arrives in Moscow, Russia on May 9, 2025

The FTSE 100 jumped as much as one per cent at the start of trading while Hang Seng in Hong Kong jumped more than three per cent. Wall Street stocks were also on track to open around three per cent higher. 

While oil prices surged more than three per cent, the dollar leapt against major currencies, leaving the euro on track for its worst day this year.

William Xin, chairman of hedge fund Spring Mountain Pu Jiang Investment Management in Shanghai, said: ‘The result far exceeds market expectations. Previously, the hope was just that the two sides can sit down to talk, and the market had been very fragile.

‘Now there’s more certainty. Both China stocks and the yuan will be in an upswing for a while.’

Across the globe, Mumbai jumped more than three percent after India and Pakistan agreed a ceasefire at the weekend following four days of missile, drone and artillery attacks between the two countries which killed at least 60 people and sent thousands fleeing.

Pakistan’s stock exchange rocketed more than nine percent.

Gold, which rallied last month over a rush to safe havens, extended losses.

‘The initial reaction to the weekend US-China talks (is) predictably encouraging,’ said Chris Weston at Pepperstone.

However, Karsten Junius at Bank J. Safra Sarasin was cautious.

‘We expect financial markets to remain volatile over the coming months, as they have almost fully priced out negative economic surprises and could once again be disrupted by more serious obstacles in trade negotiations,’ he said in a commentary.

‘In all likelihood, things may still get worse before they get better.’

Investors are also awaiting the release this week of data on US inflation and retail sales, which will provide a fresh snapshot of the world’s biggest economy since the tariffs were first unveiled.

This is a breaking news story. More to follow.