US, China agree to slash tariffs for 90 days; global equities rally

“We had very productive talks and I believe that the venue, here in Lake Geneva, added great equanimity to what was a very positive process,” Bessent said in a news conference.

“We have reached an agreement on a 90-day pause and substantially move down the tariff levels. Both sides on the reciprocal tariffs will move their tariffs down 115%,” Bessent said.

A joint statement said “the parties will establish a mechanism to continue discussions about economic and trade relations”.

US stock futures jumped and the dollar rose after China and the US made “substantial progress” in weekend trade talks in Geneva aimed at de-escalating tensions between the countries. Gold tumbled.

Contracts for the S&P 500 rose 1.6% and the Nasdaq 100 surged 2% while those for Europe added almost 1%. The Hang Seng Index was set for its best run of gains in a year. The dollar outperformed most of its European peers, while Treasuries sold off as rate cut bets eased. Crude oil rallied while gold fell 1.6%.

Speaking after the negotiations, Trade Representative Jamieson Greer told reporters “differences were not as large as maybe thought.” Greer said the two sides are having constructive conversations on the issue of fentanyl.

Financial markets have been on edge for signs of a thaw in a bitter U.S.-China trade war that has already begun to disrupt supply chains, prompt layoffs and raise wholesale prices.

Greer described the Geneva meetings' conclusion as "a deal we struck with our Chinese partners" that will help reduce the $1.2 trillion U.S. global goods trade deficit.

The meeting was the first face-to-face interaction between senior U.S. and Chinese economic officials since Trump took office and launched a global tariff blitz, declaring a national emergency over the U.S. fentanyl crisis and imposing a 20% tariff on Chinese goods in February.

Trump followed with a 34% "reciprocal" duty on Chinese imports in April, and subsequent rounds pushed the rates into triple digits, bringing nearly $600 billion in two-way trade to a standstill.

"There is a de-escalation between China and US resulting in a reduction of tariff on Chinese goods to 30% and Chinese tariffs on US goods to 10%. It's a clear vote by the market in favour of riskier assets. It's a step in the right direction and a positive of U.S. assets and U.S. economy."

"The dollar was lagging other markets in the recovery from the April lows. We had equities up back to April 2nd levels, we had bond yields up to those levels and the dollar was actually lagging that move. Now the conditions are falling into place for a deeper adjustment and a bigger recovery of the dollar to catch up with equities and bond yields," Kenneth Broux, senior strategist FX and rates, Societe Generale, London told Reuters.

"This is better than I expected. I thought tariffs would be cut to somewhere around 50% and this is much lower. Obviously, this is very positive news for economies in both countries and for the global economy, and makes investors much less concerned about the damage to global supply chains in the short term.

But we also need to keep in mind this is only a three-month temporary reduction of tariffs. So this is the beginning of a long process. The two sides will spend months probably, to come up with a resolution, or reach a final trade deal, but this is a very good starting point," Zhiwei Zhang, chief economist, Pinpoint Asset Management, Hong Kong told Reuters.

With inputs from agencies