Global markets rallied on Monday following a significant de-escalation in trade tensions between the United States and China. The two economic superpowers agreed to roll back steep tariffs and enter a 90-day negotiation period aimed at resolving longstanding trade disputes.

U.S. Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent revealed that both countries will slash recent tariff hikes by 115 percentage points, bringing U.S. tariffs on Chinese goods down to 30% and Chinese tariffs on U.S. goods to 10%. The agreement marks a pause in a trade war that has threatened global economic stability.

"This is not a decoupling. It was an embargo in all but name, and neither side wants that," said Bessent during a press briefing in Geneva. “We do want trade.”

Stock markets welcomed the news with enthusiasm. Futures for the S&P 500 surged 2.6%, while the Dow Jones Industrial Average rose by 2%. Hong Kong’s Hang Seng index jumped nearly 3%, and European markets followed suit with gains of 0.7% in Germany and France. Oil prices rose more than $1.60 per barrel, and the U.S. dollar strengthened against both the euro and the yen.

China’s Ministry of Commerce echoed the sentiment, calling the agreement a "foundation for further cooperation" and highlighting that 91% of tariffs will be canceled outright, with another 24% suspended temporarily.

“This initiative aligns with the expectations of producers and consumers in both countries and serves the interests of both nations as well as the common interests of the world,” said a ministry spokesperson.

The talks, which took place over the weekend at the Swiss ambassador's villa in Geneva, were described as constructive and personal. Delegates from both countries met for hours, with leaders occasionally breaking away for more informal discussions overlooking Lake Geneva.

Still, analysts urged caution. “This is a substantial de-escalation,” said Mark Williams, chief Asia economist at Capital Economics. “But there is no guarantee that the 90-day truce will give way to a lasting ceasefire.”

Jens Eskelund, president of the EU Chamber of Commerce in China, emphasized the importance of predictability for businesses. “The chamber hopes both sides continue dialogue and avoid measures that could disrupt global trade,” he said.

The trade war had reached new highs last month when the U.S. raised tariffs on Chinese imports to a staggering 145%, and China retaliated with 125% levies on U.S. goods. The agreement to roll back these measures signals a willingness to reset relations, at least temporarily.

Officials from both sides plan to reconvene in the coming weeks to continue negotiations. Whether this truce leads to a durable resolution remains uncertain, but for now, the global economy is breathing a sigh of relief.

European and Asian Markets Respond

The positive sentiment wasn’t limited to the U.S. In Europe, major indexes like Germany’s DAX and France’s CAC 40 rose 0.7%. In Asia, Hong Kong’s Hang Seng Index surged nearly 3%, reflecting optimism that China’s domestic economy could stabilize as export conditions improve.

“Relief is the mood across global trading desks,” said Sophie Weng, a trader at BNP Paribas in London. “The 90-day window doesn’t guarantee a resolution, but it certainly takes panic off the table for now.”

Cautious Optimism Prevails

Despite the bullish reaction, analysts warn that the current momentum could shift quickly if progress stalls in the resumed negotiations.

“This is a temporary ceasefire, not a peace treaty,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “Markets are treating it as a breakthrough, but we’ve seen similar optimism fade before.”

The next round of talks is expected within weeks, with both sides reportedly working on narrowing structural disagreements that include intellectual property rights, market access, and state subsidies.