GENEVA (AP) — On Monday, the United States and China agreed to lower the high taxes they recently placed on each other's products. This will help trade start again between the world's two biggest economies and made financial markets around the world better.

However, the decrease in trade tensions under President Donald Trump did not fix the basic problems between Beijing and Washington. The agreement lasts for 90 days, giving American and Chinese negotiators time to make a more important deal. But this break also means that taxes on goods are higher than they were before Trump increased them last month. And companies and investors have to deal with not knowing if the peace will continue.

U.S. Trade Representative Jamieson Greer said the U.S. agreed to lower the 145% tax Trump started last month to 30%. China agreed to lower its tax on U.S. goods from 125% to 10%.

Greer and the main finance official, Scott Bessent, announced that they would lower the taxes on goods coming from other countries at a press conference in Geneva.

Officials were positive and said they had planned meetings to keep talking about their trade problems. Bessent said the very high taxes the two countries put on each other last month – which made the problems Trump started worse – were "like completely stopping trade, and neither side wants that. We want trade."

The 30% tax that the US is now putting on goods from China is made up of two parts. One part is an earlier 20% tax. This 20% tax was put in place to make China do more to stop the drug fentanyl from coming into the US. The other part is the usual 10% tax that Trump put on goods from most countries. This 30% tax is added to other taxes on China. Some of these taxes were started by Trump and kept by former President Joe Biden.

Last month, Trump raised the total tax to 145% because he was angry that China was reacting, but he lowered it on Monday.

China's Ministry of Commerce said the agreement was an important step to solve the problems between the two countries and helps build a base for working together more in the future.

A ministry statement said, 'This plan is what producers and consumers in both countries want, and it helps both nations and the whole world.'

In a joint statement, the two countries announced that China would also stop or remove other actions it has taken since April 2 because of the US tariffs. China has increased its control over exporting rare earths, some of which are very important for the military. It has also added more American companies to its lists of companies it controls and considers unreliable, which limits their business in and with China.

Prices increase as the two groups become less angry

We still don't know the full effect of the complicated taxes and other trade penalties put in place by the US and China. A lot depends on whether they can solve their long-term disagreements during the 90 days they have paused.

Bessent told CNBC in an interview that American and Chinese officials plan to meet again in a few weeks.

But investors were happy because trade representatives from the world's two largest economies changed their minds.

Prices for major US stock indexes, like the S&P 500 and Dow Jones, increased significantly. Oil prices also went up a lot, and the US dollar became stronger compared to the euro and the Japanese yen.

"This is a big reduction in tension," said Mark Williams, the main Asia economist at Capital Economics. But he warned "we cannot be sure that this 90-day stop in fighting will lead to a long-term peace."

Dani Rodrik, an economist at Harvard University, said that the two countries stopped a trade war they didn't need. But he also said that the US still has high taxes of 30% on goods from China, and these taxes will mainly hurt American shoppers.

Trump got nothing from China, even though he caused a lot of trouble, Rodrik wrote on Bluesky.

Craig Singleton, a senior director at the Foundation for Defense of Democracies, said the quick agreement showed that "both countries had more economic problems than they said."

"China's economy faced real problems: more people lost their jobs, money left the country, and companies received fewer orders from abroad, the fastest drop in almost two years," Singleton said. "Trump cared about the stock market, and this agreement is a success for him, and he still has some influence."

After the U.S. and China made their announcement, stock prices rose sharply, with U.S. stocks going up by more than 2%. Stock prices in Hong Kong also increased by almost 3%, while markets in Germany and France were both 0.7% higher.

Eswar Prasad, a professor at Cornell University, said that even though the import taxes are lower now, they are still high. He added that not knowing what the future taxes will be will make it hard for trade and investment between the two countries.

However, he said it's a good sign for the global economy that U.S. taxes on imports might become important trade problems, but not impossible ones to solve.

Jay Foreman, the CEO of Basic Fun in Florida, which makes toys like Care Bears and Tonka trucks, said he was happy that the tax on Chinese goods is now 30%. But he wants it to go down to 10%.

Foreman said he told his team in China to send out the toys, which they had stopped sending since April. Before the agreement on Monday, he believed he would need to charge twice as much, but prices will still increase by 10% to 15% in the last half of the year.

"It's like they gave us a bad choice and hoped we would be happy with a slightly better one instead," Foreman said.