Kathmandu: The United States and China have reached a temporary 90-day agreement to significantly reduce the tit-for-tat tariffs that have escalated the ongoing trade war, providing a much-needed reprieve to global markets rattled by months of economic uncertainty.

The deal, announced after two days of high-level talks in Geneva over the weekend, includes a mutual decision to cut tariffs by 115 percentage points. According to US Treasury Secretary Scott Besant, the agreement will reduce US tariffs on Chinese goods to 30%, while China will lower tariffs on US imports to 10% for the 90-day period.

“This is a constructive step forward,” Besant said, describing the talks with Chinese Vice Premier He Lifeng and Trade Representative Li Chenggang as “healthy” and “productive.” He emphasized that both countries showed “great respect” during the discussions.

The agreement, seen as a breakthrough after months of retaliatory tariff hikes, comes after US President Donald Trump imposed a 145% tariff on Chinese imports last month, which prompted China to respond with 125% tariffs on US goods. The trade battle between the world’s two largest economies has threatened to fuel inflation and potentially trigger a global economic recession.

The new deal reduces the previously three-digit tariffs to double-digit levels and includes a commitment to continue economic and trade negotiations. A joint mechanism will be established to manage and monitor future discussions.

China's Ministry of Commerce welcomed the agreement, calling it “significant progress” and stating, “This step is in the common interest of both countries and the world.” The ministry also pledged cooperation to correct “the wrong practice of unilateral tariff increases.”

The announcement sparked a positive reaction in global financial markets. US stock futures rose, and European and Asian markets rallied amid hopes that easing tensions could stabilize the global economy. The US dollar, which had weakened since the beginning of the trade conflict, also showed signs of recovery.

World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala praised the development, calling it a “significant step” that benefits not only the US and China but also vulnerable economies affected by the ongoing trade turbulence.

The Geneva talks were held at the residence of the Swiss ambassador to the United Nations, just days after President Trump finalized a separate informal trade agreement with the United Kingdom. That five-page deal signaled to investors that the US might be open to sector-specific tariff relief, despite its tough stance.

Ahead of the Geneva meeting, Trump had floated the idea of an 80% tariff on Chinese goods in a social media post but later indicated a willingness to adjust tariffs if China showed readiness to negotiate.

White House Press Secretary Carolyn Levitt clarified that any tariff reduction would be contingent on reciprocal concessions from China, ruling out a unilateral rollback.

While the agreement offers temporary relief, analysts warn that long-term stability will depend on whether the two powers can build on this momentum and reach a more permanent resolution to their trade disputes.