The world’s two biggest economies agreed on Monday to slash steep tariffs for 90 days after weekend negotiations in Switzerland. The announcement sent financial markets climbing after weeks of turmoil stoked by US President Donald Trump’s sweeping “Liberation Day” tariffs on April 2. The Dow Jones Industrial Average has climbed 1,160.72 points, or 2.81 per cent, closing at 42,410.10 – above where the index closed before Liberation Day. The S&P 500 rose 3.26 per cent to close at 5,844.19 - its highest level since March 3. The Nasdaq Composite closed at 18,708.34, up 779.43 points or 4.35 per cent. Here in Australia, futures are predicting the S&P/ASX 200 Index will leap 1.2 per cent, or 97 points, at the open, to 8364. ‘Total reset’: US and China temporarily cut tariffs The relief comes as the US and China signed an agreement to drastically reduce tit-for-tat tariffs for 90 days in what Mr Trump dubbed a “total reset”. The US agreed to lower its tariffs on Chinese goods to 30 per cent – down from 145 per cent – while China will reduce its own to 10 per cent – down from 125 per cent. “Yesterday we achieved a total reset with China after productive talks in Geneva,” Mr Trump said. “I’ll speak to President Xi, maybe at the end of the week.” US Treasury Secretary Scott Bessent said weekend discussions with Chinese Vice Premier He Lifeng and international trade representative Li Chenggang were “productive” and “robust”, with both sides anticipated to meet again soon. “Both sides showed great respect,” he told reporters. These actions are to be taken by Wednesday. Mr Bessent told CNBC that he expects US and Chinese representatives to meet again in the coming weeks to work out “a more fulsome agreement.” While Washington does not want broad decoupling from China, it seeks “decoupling for strategic necessities,” Mr Bessent said. He added to CNBC that the purpose of the 90-day pause was also to see what the US could do about non-tariff barriers weighing on US firms. China hailed the “substantial progress” made at the talks, held at the discreet villa residence of Switzerland’s ambassador to the United Nations in Geneva. This move “is in the interest of the two countries and the common interest of the world,” the Chinese commerce ministry said, adding that it hoped Washington would keep working with Beijing “to correct the wrong practice of unilateral tariff rises.” With the agreement, China also committed to suspending or removing non-tariff countermeasures.