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HONG KONG — The U.S. and China said Monday that they had agreed to a 90-day pause on most of the tariffs they have imposed on each other since last month, sending stocks soaring amid hopes of an easing trade war between the world’s two largest economies.
U.S. tariffs on Chinese imports will be cut to 30% from 145%, while China’s levies on U.S. imports will be cut to 10% from 125%, the two countries said in a joint statement.
The announcement comes after officials from the two countries met in Geneva, Switzerland, over the weekend for their first face-to-face talks on the tariffs, which began mounting after President Donald Trump’s April 2 announcement of sweeping global duties.
The United States has a larger goods trade deficit with China than with any other country, and Trump has often accused it of “ripping off” the U.S. through unfair trade practices. Unlike other U.S. trading partners, Beijing responded by imposing retaliatory tariffs and other non-tariff measures on Washington that quickly escalated in a dizzying game of one-upmanship.
U.S. officials had “very constructive and positive conversations with our Chinese counterparts, who clearly came to deal this week,” U.S. Trade Representative Jamieson Greer said at a news conference in Geneva.
The tariffs had amounted to “the equivalent of an embargo,” which neither side wanted, said Treasury Secretary Scott Bessent, who also represented the U.S. in the talks.
“We do want trade, we want more balanced trade, and I think that both sides are committed to achieving that,” he said.
Bessent rejected the suggestion that it might have been better to start with negotiations rather than announcing a series of tariffs that caused global financial turmoil, saying the U.S. had already tried to rebalance trade by working within the system and that “business as usual” would not have worked.
The Chinese Ministry of Commerce said the agreement was an “important step” and “creates favorable conditions for further narrowing differences and deepening cooperation.”
“It is hoped that the U.S. will build on the foundation of this meeting, continue to work in the same direction with China” and “completely correct its unilateral tariff practices,” a spokesperson said.
The afternoon announcement sent U.S. stocks leaping in pre-market trading. The Dow Jones Industrial Average was up 2.1%, while the S&P 500 index was up 2.8% and the tech-heavy Nasdaq index was up 3.8%.
European indexes posted more modest gains late Monday morning, after Hong Kong’s Hang Seng Index soared following the news. The index closed up more than 3%, while mainland Chinese markets closed higher before details of the agreement were released.
Markets across Asia had upbeat sessions Monday in anticipation of some kind of agreement from the U.S.-China talks, as well as a ceasefire between India and Pakistan that seems to be holding despite localized skirmishes after conflict erupted between the two South Asian rivals last week.
The U.S. and China said they would also “establish a mechanism to continue discussions about economic and trade relations.” The U.S. will continue to be represented by Greer and Bessent, while China will continue to be represented by Vice Premier He Lifeng.
The discussions may take place alternately in China and the U.S., or in a third country agreed upon by both countries. The two sides may also conduct working-level consultations on relevant economic and trade issues.
Other U.S. tariffs on Chinese goods, including those from Trump’s first term as well as more recent ones related to China’s role in the international flow of fentanyl, remain in place, with Greer saying that separate discussions on fentanyl were “on a very positive track.”
The impact of the reciprocal tariffs was already being felt, with the number of shipping containers traveling to the U.S. from China falling dramatically since early April.
Danish shipping company A.P. Moller-Maersk called the U.S.-China tariff agreement “a step in the right direction.”
“We hope it can lay the foundation for the parties to also reach a permanent deal that can create the long-term predictability our customers need,” it said in a statement.
The agreement “will save medium and small enterprises on both sides of the Pacific,” said Tianchen Xu, a Beijing-based economist at the Economist Intelligence Unit, a financial forecasting service.
It will come as “a very big relief for struggling small Chinese exporters, some of which have already lost U.S. orders for weeks,” he said in emailed comments.
U.S. importers, meanwhile, “will be able to avoid a surge in import costs,” he said. “This carries positive implications for the overall economy and the labor market.”
The agreement exceeded expectations and has “rekindled global hope,” said Wang Wen, dean of the Chongyang Institute for Financial Studies at Renmin University of China.
But Xu and Wang both cautioned that many difficult issues remain to be resolved and the trade war could potentially reignite.
“This situation is a major test of the political wisdom and negotiation capability of the decision-makers in both China and the U.S.,” Wang said.
Jennifer Jett is the Asia Digital Editor for NBC News, based in Hong Kong.
Peter Guo is a fellow on NBC’s Asia Desk, based in Hong Kong.
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