The US and China have agreed a deal that will significantly cut the import tariffs, or taxes, both sides have imposed on one another for a 90-day period.
US Treasury Secretary Scott Bessent said both countries would lower their reciprocal tariffs by 115% for 90 days.
The announcement came after the two countries held intensive talks in Switzerland over the weekend.
It was the first meeting between the two countries since US President Donald Trump had levied steep tariffs against China on its goods entering America in January.
President Trump had imposed a 145% tariff on Chinese imports, while Beijing responded with a 125% levy on some US goods.
However, the US tariffs on Chinese imports will now be cut to 30% for 90 days, while Chinese tariffs on US imports will be cut to 10% for the same period of time.
The US measures still include an extra component aimed at putting pressure on Beijing to do more to curb the illegal trade in fentanyl, a powerful opioid drug.
But US officials said they had been positively surprised by the willingness of China to deal with the problem.
“Both countries represented their national interest very well,” Bessent said.
“We both have an interest in balanced trade, the US will continue moving towards that.”
When the original tariffs were imposed it caused turmoil in the financial markets and sparked fears of a global recession.
News of the pausing of the tariffs led to a rebound on stock markets.
Hong Kong’s benchmark Hang Seng Index jumped on the announcement, ending the day up 3%. China’s Shanghai Composite Index had closed before details of the deal came out, and ended 0.8% higher.
European stocks opened higher and early indications were that the main US stock markets will open up by 2-3%.
