GENEVA (AP) — The United States and China agreed on Monday to lower the high taxes they recently put on each other's products. This will help trade start again between the world's two biggest economies and caused prices to go up in markets around the world.

However, stopping the trade war for now didn't fix the main disagreements between China and the United States.

U.S. Trade Representative 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 U.S. goods from 125% to 10%.

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

Officials sounded positive when they announced that both sides had agreed to meet again to talk about trade problems. They said the high taxes placed on goods traded between the two countries last month were like a complete ban on trade, which neither side wanted. They added that they did want to trade.

The US is now putting a 30% tax on goods from China. This tax includes a 20% tax that was already there. That 20% tax was meant to make China try harder to stop the drug fentanyl from coming into the US. The 30% tax also includes a 10% tax that Trump put on goods from most countries. This new 30% tax is in addition to other taxes on China. Some of these taxes were started by Trump and kept by Biden.

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

China's Commerce Ministry said the agreement was an important step to solve the disagreements between the two countries and builds a basis for more cooperation.

A statement from the ministry said that this plan is in line with what producers and consumers in both countries want, and it is good for both nations and the world in general.

The statement from both countries said China also agreed to stop or remove other actions it has taken since April 2 because of the US tariffs. China has put more controls on sending out rare earths, some of which are very important for the defense industry. It has also put more American companies on lists that control exports and list companies that cannot be trusted, which limits their business with and in China.

Markets rise as the two sides reduce tensions

The full effect of the complex taxes and other trade punishments put in place by Washington and Beijing is still not clear. And a lot depends on whether they can find ways to solve their old disagreements during the 90 days they have agreed to stop fighting.

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 when trade officials from the world's two largest economies changed their minds.

Future prices for the S&P 500 increased by 2.6%, and the Dow Jones Industrial Average rose by 2%. The price of oil went up by more than $1.60 for each barrel, and the dollar became stronger compared to the euro and the Japanese yen.

Mark Williams, a main economist for Asia at Capital Economics, said this was a big drop in tension. But he said the 90-day deal might not result in a long-term peace.

Dani Rodrik, an economist at Harvard, said the two countries stopped a trade fight they didn't need. However, the US still has high taxes on Chinese goods, about 30%, which will mostly harm American buyers.

According to Rodrik on Bluesky, Trump did not get anything from China even though he caused a lot of problems.

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

"China faced real economic difficulties: more people lost their jobs, money was leaving the country, and companies were ordering fewer goods from China, the quickest fall in almost two years," Singleton said. "Trump cared about the financial markets, and this agreement is a success for him because he keeps his influence."

After the news from the U.S. and China, stock markets went up a lot. U.S. stock futures increased by over 2%, the Hang Seng index in Hong Kong rose by nearly 3%, and the main stock markets in Germany and France both increased by 0.7%.

Even though tariffs are lower now, and we don't know what they will be in the future, this will still limit trade and investment between the two countries, according to Eswar Prasad, a professor at Cornell University.

However, he said it's a good sign for the world economy that US taxes on imports might become important trade problems, but not problems that are impossible to overcome.

Jay Foreman, the head of Basic Fun, a toy company in Florida that makes 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 explained that he had just told his team in China to send out the toy orders, which had been stopped since the beginning of April. He said that before Monday's agreement, he believed he would need to make prices twice as high. However, prices will still increase by 10% to 15% in the last half of the year.

"It's like they gave us something bad and expected us to be happy with something else that was also bad," Foreman said.