The US and China have agreed a deal that will significantly cut the import tariffs they have imposed on each other, in a major de-escalation of their trade war.

US Treasury Secretary Scott Bessent said both countries would lower their reciprocal tariffs by 115% for 90 days.

The announcement came after the two countries held talks in Switzerland, the first between the two countries since US President Donald Trump had levied steep tariffs on Chinese imports last month.

Shares jumped on news of the deal. Last month, the imposition of the tariffs had caused turmoil in financial markets and sparked fears of a global recession.

The trade war between China and the US intensified last month after President Trump announced a universal baseline tariff on all imports to the US, on what he called "Liberation Day".

Around 60 trading partners, which the White House described as the "worst offenders", were subjected to higher rates than others, and this included China.

China retaliated with tariffs of its own, and this ratcheting up of levies ultimately led to the US imposing a 145% tariff on Chinese imports, while Beijing had a 125% levy on some US goods.

Under the new agreement, the US and China have both suspended all but 10% of their Liberation Day tariffs for 90 days and cancelled other retaliatory tariffs.

This will cut US tariffs on Chinese imports to 30%, while Chinese tariffs on US imports will be cut to 10%. The pause will begin on 14 May.

The US measures still include an extra 20% component aimed at putting pressure on Beijing to do more to curb the illegal trade in fentanyl, a powerful opioid drug.

The huge tariffs imposed had raised the prospect of trade between the two countries slumping, with US ports reporting a sharp drop in the number of ships scheduled to arrive from China.

Meanwhile Beijing has become increasingly concerned about the impact the tariffs could have on its economy. Factory output has already slowed and there are reports some firms were having to lay off workers as production lines of goods bound for the US began to grind to a halt.

Announcing the agreement, Bessent said: "The consensus from both delegations this weekend is neither side wants a decoupling.

"What had occurred with these very high tariffs was the equivalent of an embargo, and neither side wants that.

"We do want trade, we want more balanced trade, and I think that both sides are committed to achieving that."

China's commerce ministry said the agreement reached with the US was an important step to "resolve differences" and "lay the foundation to bridge differences and deepen co-operation".

Neil Shearing, group chief economist at Capital Economics, said the agreement represented a "significant de-escalation" of the trade war.

"We've come from a place where tariffs imposed... were so high as to almost preclude trade in the long run between the world's two largest economies," he told the BBC.

However, he added, while trade will now continue, "it will happen at a higher price and that higher price will be borne by US consumers and US businesses".

News of the agreement boosted stock markets, with Hong Kong's benchmark Hang Seng Index ending the day up 3%. China's Shanghai Composite Index had closed before details of the deal came out, and ended 0.8% higher.

European stocks rose and early indications were that the main US stock markets will open up by 2-3%.

The deal has boosted shares in shipping companies, with Denmark's Maersk up more than 12% and Germany's Hapag-Lloyd jumping 14%.

Maersk told the BBC the US-China agreement was "a step in the right direction".

"We hope it can lay the foundation for the parties to also reach a permanent deal that can create the long-term predictability our customers need."

However, the gold price - which has benefited from its safe-haven status in recent weeks given the disruption caused by the tariffs - fell 3% to $3,224.34 an ounce.

In a joint statement, both countries said they would establish "a mechanism to continue discussions about economic and trade relations", led by Scott Bessent and China's Vice Premier He Lifeng.

It added that both countries believe that "continued discussions have the potential to address the concerns of each side in their economic and trade relationship".

President Trump has long been unhappy with the fact that the US buys substantially more goods from China than it sells it.

Other concerns include a lack of protection for the intellectual property rights of American companies in China including the forced transfer of technology.

There's also unhappiness about alleged Chinese government subsidies that give their companies an unfair advantage - something Beijing says Washington also does.

When President Trump first announced the tariffs, he argued they would boost American manufacturing and protect jobs.

But many economists argued they would hit growth in the global economy, and make many products more expensive for US consumers.

Last month, the International Monetary Fund cut its growth forecast for the global economy for this year to 2.8% from 3.3%, arguing that the uncertainty caused by the tariffs would hit supply chains and lead to firm's either pausing or cutting investment.

The UK and US reached a deal last week over tariffs on some goods traded between the countries.

The blanket 10% tariffs on imports entering the US from countries around the world still applies to most UK goods, but the deal reduced or removed tariffs on some UK exports, including cars, steel and aluminium.