US, China agree to reduce tariffs for 90 days: Joint statement

US Treasury Secretary Scott Bessent (R) and US Trade Representative Jamieson Greer hold a news conference in Geneva on May 12, 2025, to give details of "substantial progress" following a two-day closed-door meeting between US and China top officials aimed at ending a devastating tariff war. Photo / AFP, Fabrice COFFRINI

Stocks rallied on Monday after Chinese and US officials held “substantial” trade talks and slashed their tit-for-tat tariffs for 90 days.

The progress has fuelled hopes the two sides will pull back from a standoff that has rattled global markets.

Investors have been on a rollercoaster ride since Donald Trump unveiled eye-watering tolls on trading partners on April 2, with the heftiest saved for Beijing, raising concerns of a trade war between the economic superpowers.

The US president eventually hiked the measures against China to 145 percent, which were met with retaliatory rates of 125 percent.

However, there have been signs of an easing of tensions and after two days of highly anticipated negotiations in Geneva, the two countries hailed progress towards ending a crisis that fuelled fears of a global recession.

On Monday the two said they would slash their levies to cool tensions and give officials time to resolve their differences.

In a joint statement the US side said it would reduce tolls to 30 percent while Chinese tariffs would be cut to 10 percent.

That came after US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer met Chinese Vice Premier He Lifeng and international trade representative Li Chenggang in the first known talks since Trump’s “Liberation Day” announcement.

“We’ve made substantial progress between the United States and China in the very important trade talks,” Bessent told reporters, while the White House has hailed what it called a new “trade deal”.

China’s He said the atmosphere in the talks was “candid, in-depth and constructive”, adding that they were “an important first step”.

Asian markets jumped, with Hong Kong up more than three percent while Shanghai also enjoyed healthy buying interest.

Tokyo, Sydney, Seoul, Taipei and Wellington were all in the green.

London, Paris and Frankfurt all rose more than one percent.

US futures surged more than one percent.

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.

Oil prices jumped more than three percent owing to speculation easing China-US tensions would help demand. The dollar also advanced one percent against the euro and yen.

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.

– Agence France-Presse