GENEVA (AP) — The United States and China agreed on Monday to greatly reduce the import taxes they recently put on each other's goods. This will help trade between the world's two largest economies start again and made global financial markets better.

However, the calmer situation in the trade disagreements between President Donald Trump and China did not solve the main problems.

An American official, Jamieson Greer, said the U.S. agreed to lower the 145% tax Trump started last month to 30%. China also agreed to lower its tax on American goods from 125% to 10%.

Greer and the Treasury Secretary Scott Bessent announced the lower taxes at a press conference in Geneva.

Officials sounded hopeful, stating that both sides had created a way to keep talking about their trade problems. Bessent mentioned that the very high taxes on goods that the two countries put on each other last month were like a total ban on trade, which neither country wants. He added that they do want trade.

The USA now has a 30% tax on goods from China. This tax includes a 20% tax that was already there. This 20% tax was meant to pressure China to do more to stop a drug called fentanyl from entering the USA. The 30% tax also includes a 10% tax that the previous president, Trump, put on imports from most countries. This 30% tax is added to other taxes on China. Some of these other taxes were started by Trump and kept by the current president, Joe Biden.

Last month, Trump increased the total tax to 145% because he was angry that China was fighting back, but he changed his decision on Monday.

The Chinese Ministry of Commerce said the agreement was a significant move to solve the problems between the two countries and helps prepare for future cooperation.

A statement from the ministry said that this plan is what producers and consumers in both countries want, and it helps both nations and the world.

The two countries' statement also said that China agreed to stop or change other actions it took after April 2, when the US added tariffs. China has put more controls on sending out rare earths, which are important for making military equipment. It has also added more American companies to its lists, making it harder for them to do business with and in China.

Markets rise as the two sides reduce tensions.

We still don't know the full effect of the complicated taxes and trade rules the US and China have started. A lot depends on whether they can find ways to agree on their old problems during the 90 days they have paused.

Bessent told CNBC in an interview that officials from the U.S. and China will meet again in a few weeks.

But investors were happy because trade officials from the world’s two biggest economies changed their position.

Stock market futures for the S&P 500 went up by 2.6%, and the Dow Jones Industrial Average also rose by 2%. Oil prices increased quickly by over $1.60 a barrel, and the dollar got stronger against the euro and the Japanese yen.

"This is a big drop in tension," said Mark Williams, the main Asia economist at Capital Economics. But he warned that "it's not certain that the 90-day deal will lead to a long-term end to the disagreement."

Dani Rodrik, an economist at Harvard University, said the two countries stopped a trade war they didn't need. But he also said the US still has high taxes on Chinese goods, around 30%, which will mostly hurt American shoppers.

Rodrik wrote on Bluesky that Trump did not get anything from China, even though he caused many problems.

Craig Singleton, who leads the China program at the Foundation for Defense of Democracies, said the agreement happened very fast. He believed this suggested that "both sides were facing more economic difficulties than they admitted."

Singleton said that China had real economic problems, like more people losing their jobs, money leaving the country, and fewer orders for goods from other countries. He mentioned that these orders were falling faster than they had in almost two years. Singleton also said that for Trump, the stock market was important, and this deal helps him win while still having some power.

When the U.S. and China made their announcement, stock prices went up a lot. For example, U.S. stock futures increased by over 2%, Hong Kong’s Hang Seng index rose by almost 3%, and stock markets in Germany and France both went up by 0.7%.

Even though the taxes on imports are now just high instead of very high, and we don't know what will happen with future taxes, this will still make it harder for the two countries to trade and invest with each other, said Eswar Prasad, a professor who studies trade rules at Cornell University.

He said it's a good sign for the world economy that U.S. tariffs might become big trade barriers but probably won't be impossible to get past.

Jay Foreman, the boss of Basic Fun (a company in Florida that makes famous toys like Care Bears and Tonka trucks), said he was happy that the tax on goods from China was now lower at 30%. But he hopes it will go down to 10%.

Foreman said he told his team in China to send out the toy orders. They had been stopped since the start of April. He said that before the agreement on Monday, he thought he would have to make prices twice as high. But now, they will only go up by 10% to 15% for the last six months of the year.

"It's like they gave us a bad option and thought we'd be happy with another bad option instead," Foreman said.