Geneva, 12 MAy

In a bid to ease trade tensions, the US and China have agreed to temporarily slash tariffs on each other’s goods, granting a three-month window to negotiate further, as per a joint statement issued.

Stock markets rose sharply as the globe's two major economic powers took a step back from a clash that has unsettled the global economy.

US Trade Representative Jamieson Greer said the US agreed to drop its 145% tariff rate on Chinese goods by 115 percentage points to 30%, while China agreed to lower its rate on US goods by the same amount to 10%.

Greer and Treasury Secretary Scott Bessent announced the tariff reductions at a news conference in Geneva.

The two officials struck a positive tone as they said the two sides had set up consultations to continue discussing their trade issues.

Bessent said at the news briefing after two days of talks that the high tariff levels would have amounted to a complete blockage of each side's goods, an outcome neither side wanted.

“The consensus from both delegations this weekend is that neither side wants a decoupling,” Bessent said. “And what had occurred with these very high tariffs ... was an embargo, the equivalent of an embargo. And neither side wants that. We do want trade. We want more balanced trade. And I think that both sides are committed to achieving that."

Trump last month raised US tariffs on China to a combined 145%, and China retaliated by hitting American imports with a 125% levy. Tariffs that high essentially amount to the two countries boycotting each other's products, disrupting trade that last year topped $660 billion.

The announcement by the U.S. and China sent shares surging, with US futures jumping more than 2%. Hong Kong's Hang Seng index surged nearly 3% and benchmarks in Germany and France were both up 0.7%.