U.S. and China agree to slash tariffs for 90 days in major trade breakthrough

The U.S. and China on Monday agreed to temporarily suspend most tariffs on each other’s goods in a move that shows a major thawing of trade tensions between the world’s two largest economies.

The trade agreement means that “reciprocal” tariffs between both countries will be cut from 125% to 10%. The U.S.’ 20% duties on Chinese imports relating to fentanyl will remain in place, meaning total tariffs on China stand at 30%.

The breakthrough comes after U.S. and China trade representatives held high-stakes talks in Switzerland over the weekend.

“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,” U.S. Treasury Secretary Scott 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.

Both China and the U.S. said they will continue discussions on economic and trade policy.

Investors were buoyed by news of the tariff reprieve. Stateside, Nasdaq futures pointed to a 3.6% gain, with the S&P 500 futures higher by 2.8% and Dow up by nearly 1,000 points, or 2.3%.

The ICE U.S. Dollar Index also rose sharply. The index, which measures the U.S. dollar against a basket of global currencies, was last up 1.3% to 101.63.

Elsewhere, the pan-European Stoxx 600 index rose by 0.7% during early morning deals.

This is a breaking news story and will be updated shortly.