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 talks in Switzerland, the first between the two countries since US President Donald Trump had levied steep tariffs on Chinese imports.

The huge tariffs caused turmoil in the financial markets and sparked fears of a global recession.

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 pause will begin on 14 May.

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.

The imposition of the tariffs had raised the prospect of trade between the two countries slumping, with US ports reporting a sharp drop in the number of ships scheduled to arrive from China.

Meanwhile Beijing has become increasingly concerned about the impact the tariffs could have on its economy. Factory output has already slowed and there are reports some firms were having to lay off workers as production lines of goods bound for the US began to grind to a halt.

Announcing the agreement, Bessent said: "The consensus from both delegations this weekend is neither side wants a decoupling.

"What had occurred with these very high tariffs was the equivalent of an embargo, and neither side wants that.

"We do want trade, we want more balanced trade, and I think that both sides are committed to achieving that." 

China's commerce ministry said the agreement reached with the US was an important step to "resolve differences" and "lay the foundation to bridge differences and deepen co-operation".

News of the agreement boosted stock markets, with Hong Kong's benchmark Hang Seng Index 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 rose in early trade and early indications were that the main US stock markets will open up by 2-3%.