US and China agree to slash tariffs on each other

The US and China, the world's largest and second-largest economies, have agreed to slash tariffs on each other as they seek to end their trade war.

Speaking after talks with Chinese officials in Geneva, US treasury secretary Scott Bessent told reporters the two sides had reached a deal for a 90-day pause on measures. US trade representative Jamieson Greer said so-called reciprocal tariffs were now at 10% each.

In real terms, it meant the US is reducing its 145% tariff to 30% on Chinese goods. A tariff of 20% had been implemented on China when President Donald Trump took office, over what his administration said was a failure to stop illegal drugs entering the US.

China has agreed to reduce its 125% retaliatory tariffs to 10% on US goods. Sector-specific tariffs, such as the 25% tax on cars, aluminium and steel, remain in place.

Money blog: Life as a divorce lawyer Tariffs, taxes on imports of more than 100%, had been imposed on both sides. China was the only country exempt from a 90-day pause on the "retaliatory" tariffs above the base 10% levies applied by America.

Major retailers had been warning Mr Trump of empty shelves as US importers pause shipments. Mr Bessent said after a weekend of negotiations in Switzerland, the countries had a mechanism for continued talks.

It's the second major trade announcement made by the US in the last week, after a deal was secured with the UK on Thursday. The move signals a willingness from the Americans to make deals on tariffs.

Welcomed news The news was received positively by Asian stock markets on Monday as major indexes were up. In China, the Shanghai Composite stock index rose 0.8%, the Shenzhen Component gained 1.7%, and Hong Kong's Hang Seng index was up nearly 3%.

In countries across Asia, benchmark stock indexes also rose. Korea's Kospi grew 1.1%, Japan's Nikkei was up 0.8%, while India's Nifty 50 index of most valuable companies gained more than 3%.

US stocks look poised to rise on the open, based on after-hours trading. Wall Street's tech-heavy Nasdaq is expected to rise by 3.3%, and the S&P 500 index of companies relied on to be stable and profitable by 2.5%.

The market rally was visible in Europe, too. France's CAC 40 is up 1.3%, Germany's DAX rose 0.5%, and Spain's IBEX 35 rose 0.5%.

The pan-European index, the Stoxx 600 gained 0.9% by Monday afternoon. What next? When asked by journalists about what the US wanted to see from China in the 90s, Mr Bessent said, "As long as there is good faith effort, engagement and constructive dialogue, then we will keep moving forward." The UK came to the front of the line for deals, Mr Bessent added, "as our oldest ally".

Switzerland had also moved to the "front of the queue.