Trump says he will talk to Xi as trade tension cools and markets recover

'The relationship is very good. We're not looking to hurt China,' US President says

US President Donald Trump with Chinese President Xi Jinping during a meeting on the sidelines of the G20 summit in Osaka, 2019. Relief in trade tensions between the two countries has brought markets respite. APShow less

US President Donald Trump on Monday said he could speak to China's President Xi Jinping this week as trade tension between the world's two largest economies cooled.

Washington and Beijing on Monday agreed to lower tariffs for 90 days, in a major de-escalation of Mr Trump's trade war.

“I’ll speak to President Xi, maybe at the end of the week,” Mr Trump said at the White House on Monday.

Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer held talks with a Chinese delegation in Switzerland at the weekend, resulting in the 145 per cent tariffs levied on most Chinese imports being cut to 30 per cent. Chinese duties on US goods will drop to 10 per cent.

“The talks in Geneva were very friendly, the relationship is very good. We're not looking to hurt China,” Mr Trump said. “China was being hurt very badly. They were closing up factories. They were having a lot of unrest and they were very happy to be able to do something with us.”

The three-month retreat from higher tariffs will give the US and China time to come to a broader trade agreement. Global markets soared on the news.

The S&P 500 was up 3.1 per cent in afternoon trading and back within 5 per cent of its all-time high set in February. It has climbed higher since falling nearly 20 per cent in April on hopes that Mr Trump will further curtail his trade war and lower tariffs on other countries.

Mr Trump said the talks with China amounted to a “total reset” in relations. The 90-day reprieve comes at a crucial time for the US economy, which had at risk with consumer confidence and fears of a recession.

Economic reports scheduled to be released this week, including on inflation and sentiment among US consumers, could show how much damage the US economy has already taken because of uncertainty about tariffs.

Businesses in China were also relieved after news of the deal, with companies saying they would hold off on job cuts and production line closures.

China’s Commerce Ministry called the agreement an important step for the resolution of the two countries’ differences and said it lays the foundation for further co-operation.

“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,” a ministry statement said.

A trader works on the floor of the New York Stock Exchange on Monday. EPA