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, as a tariff of around 20% had been in effect from previous administrations.

China has agreed to reduce its 125% retaliatory tariffs to 10% on US goods.

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Tariffs, taxes on imports of more than 100%, had been imposed on both sides. China was the only country exempt from a 90 pause on the “retaliatory” tariffs above the base 10% levies applied by America.

Major retailers had been warning President Donald Trump of empty shelves as US importers pause shipments.

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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%.

What next?

As with the other counties subject to 90-day pauses, a permanent deal will need to be reached, but confidence across the world is likely to have been boosted.

Businesses now need a clear timetable and roadmap for future negotiations under the newly announced economic and trade consultation mechanism, said Andrew Wilson, the deputy secretary general of the International Chamber of Commerce.

“The credibility of that process for resolving underlying frictions in the Sino-US economic relationship will be mission-critical in terms of restoring business confidence.”

Donald Trump’s tour of the Middle East this week has taken on a new importance after a series of surprising developments on the wars in Ukraine and Gaza, and on trade between the US and China.

After a diplomatic flurry over the weekend, it seemed like steps were being taken towards some form of possible peace in both Gaza and Ukraine.

Alongside that, Washington claimed it had made “substantial progress” in trade talks with China, with treasury secretary Scott Bessent going as far as to say a deal had been agreed to cut the US trade deficit. But there was no mention of reducing tariffs.

Mr Trump is due to travel to the Middle East later today on the first major foreign trip of his second presidency, visiting Saudi Arabia and then Qatar and the UAE.

It will coincide with a possible meeting between Ukraine’s Volodymyr Zelenskyy and Russia’s Vladimir Putin, in person in Turkey, and comes after Hamas said it would release a hostage, an Israeli soldier who holds American citizenship.

This leaves Mr Trump facing challenges on three fronts as he visits some of the richest nations in the world.

Zelenskyy and Putin to meet?

The US president previously claimed he could end the war in Ukraine in one day – something he has not done.

On Sunday, he put pressure on Mr Zelenskyy to sit down and meet with Mr Putin in person after Moscow put forward the proposal for talks in Istanbul.

This was something the leader from Kyiv quickly agreed to and it came after European leaders threatened Mr Putin with fresh sanctions.

Thursday could see a potential first in-person meeting between the two leaders since Moscow’s invasion began.

It could mark an extraordinary moment in the ongoing war in Ukraine, however, the countries are seemingly still a long way from actual peace.

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A trade deal or a first step?

After Mr Trump declared war on the existing global trade system in April, hitting allies and foes alike with tariffs, it left many reeling and triggered an escalation with China, which slapped Washington with reciprocal measures.

While those are still in place, the US said on Sunday that the two have agreed a deal to cut the US trade deficit.

However, despite confidence from the US side, China’s vice premier He Lifeng described the meeting as an “important first step” that created a foundation only.

No mention was made of reducing tariffs and this would do little good elsewhere where tariffs continue to add friction to previously freer global trade.

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Israeli soldier to be released

In Gaza, previous efforts to achieve a ceasefire collapsed and Israel implemented a total ban on aid going into the enclave to try to pressure Hamas back to the negotiating table.

With charities warning that the 2.3 million Palestinians in Gaza face a humanitarian crisis, the militant group has said it will release Edan Alexander, an Israeli soldier who holds US citizenship.

It comes after Israel announced it intends to occupy the entire enclave, threatening years of more war.

No exact date was given, but Hamas said it would release the 21-year-old as part of ongoing efforts to achieve a permanent ceasefire with Israel.

His expected release has been described as a “gesture of goodwill” by Steve Witkoff, Mr Trump’s special envoy to the Middle East.

The previously agreed ceasefire failed over disagreement on the transition from phase one onwards.

While Hamas wanted to progress to phase two, where work would be done towards Israel’s permanent withdrawal from Gaza and peace, Israel wanted to extend phase one and release more hostages.

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Israel agreed to a framework proposed by the US that would see Hamas release half of the remaining hostages, its main bargaining chip, in exchange for a ceasefire extension and a promise to negotiate a lasting truce.

While Mr Alexander is only one hostage, it will be seen as a promising sign that Hamas returned to the negotiating table and Mr Trump will be in Qatar, the key mediator in so-far unsuccessful peace efforts.

It has been an extraordinary few hours which may well set the tone for a hugely consequential week ahead.

In the time that it took me to fly from London to Saudi Arabia, where President Donald Trump will begin a pivotal Middle East tour this week, a flurry of news has emerged on a range of key global challenges.

• On the Gaza war: The Trump administration has confirmed it’s holding talks with Hamas, who say it will release a hostage amid renewed hopes of a ceasefire.

• On the Ukraine war: President Volodymyr Zelenskyy has said he is prepared to meet Russian President Vladimir Putin in Istanbul – this announcement came minutes after Trump urged Zelenskyy to agree to the meeting.

• On the China-US trade war: The White House says the two countries have agreed to a “trade deal”. China said the talks, in Geneva, were “candid, in-depth and constructive”.

All three of these developments represent dramatic shifts in three separate challenges and hint at the remarkable influence the US president is having globally.

This sets the ground for what could be a truly consequential week for Trump’s presidency and his ability to effect change.

With his unique style, Trump is seeking to align numerous stars as he embarks on his first foreign diplomatic trip of his second presidency.

For days, it’s been unclear how the week ahead would unfold and which global challenge would be dominant.

The Saudi government has been instrumental as a broker in the Ukraine-Russia conflict and Qatar has been a mediator in the Gaza war.

Trump will visit both countries this week.

Putin under pressure?

On Ukraine, Putin held a late-night news conference at the Kremlin on Saturday at which he made the surprise proposal of talks with Zelenskyy in Istanbul this Thursday.

But he rejected European and US calls for an immediate ceasefire.

The move was widely interpreted as a delay tactic.

Trump then issued a social media post urging Zelenskyy to accept the Russian proposal; effectively to call Putin’s bluff.

The American president wrote: “President Putin of Russia doesn’t want to have a Cease Fire Agreement with Ukraine, but rather wants to meet on Thursday, in Turkey, to negotiate a possible end to the BLOODBATH. Ukraine should agree to this, IMMEDIATELY. At least they will be able to determine whether or not a deal is possible, and if it is not, European leaders, and the U.S., will know where everything stands, and can proceed accordingly! I’m starting to doubt that Ukraine will make a deal with Putin, who’s too busy celebrating the Victory of World War ll, which could not have been won (not even close!) without the United States of America. HAVE THE MEETING, NOW!!!”

Within minutes, Zelenskyy responded, agreeing to the talks.

“We await a full and lasting ceasefire, starting from tomorrow, to provide the necessary basis for diplomacy. There is no point in prolonging the killings. And I will be waiting for Putin in Türkiye on Thursday. Personally. I hope that this time the Russians will not look for excuses.” Zelenskyy wrote on X.

The prospect of Putin and Zelenskyy together in Istanbul on Thursday is remarkable.

It raises the possibility that Trump would want to be there too.

Israel’s war in Gaza

On Gaza, it’s been announced that US envoy Steve Witkoff will arrive in Israel on Monday to finalise details for the release of Idan Alexander, an Israeli-American hostage being held by Hamas.

The development comes after it was confirmed that Mr Witkoff has been holding discussions with Israel, Qatar and Egypt and, through them, with Hamas.

The talks focused on a possible Gaza hostage deal and larger peace discussions for a ceasefire.

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Just days ago, Israel announced a new military plan to move back into Gaza.

When do candid talks become a trade deal?

Meanwhile, officials from the United States and China have been holding talks in Geneva, Switzerland, to resolve their trade war, which was instigated by Trump’s tariffs against China.

Late on Sunday evening, the White House released a statement claiming that a trade deal had been struck.

In a written statement, titled “U.S. Announces China Trade Deal in Geneva”, treasury secretary Scott Bessent said: “I’m happy to report that we made substantial progress between the United States and China in the very important trade talks… We will be giving details tomorrow, but I can tell you that the talks were productive. We had the vice premier, two vice ministers, who were integrally involved, Ambassador Jamieson, and myself. And I spoke to President Trump, as did Ambassador Jamieson, last night, and he is fully informed of what is going on. So, there will be a complete briefing tomorrow morning.”

Beijing Global Times newspaper quoted the Chinese vice premier as saying that the talks were candid, in-depth and constructive.

However, the Chinese fell short of calling it a trade deal.

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A Qatari gift

In a separate development, US media reports say that Qatar is preparing to gift Trump a Boeing 747 from its royal fleet, which he would use as a replacement for the existing and aging Air Force One plane.

The Qatari government says no deal has been finalised, but the development is already causing controversy because of the optics of accepting gifts of this value.