The United States agreed not to raise tariffs further on January 1, while China agreed to buy more agricultural products from USA farmers immediately.
President Donald Trump said in a late-night tweet that China has agreed to "reduce and remove" tariffs on imported American-made cars, a claim that wasn't immediately confirmed by Beijing.
Resolving the tariff war between the US and China is seen as crucial for American agriculture, particularly soybeans, America's largest export to China, which accounted for $12.4 billion in sales previous year.
In addition, the U.S. said China agreed to "purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other products from the United States". China responded with tariffs of its own on various US exports.
"We are dealing from great strength, but China likewise has much to gain if and when a deal is completed", Trump wrote.
"The prospects for real progress on substantive issues with China are now better than at any point in the Trump administration", said Andy Rothman, investment strategist at Matthews Asia.
"China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial and other product from the United States to reduce the trade imbalance between our two countries", said White House Press Secretary Sarah Sanders. Farmers, I LOVE YOU!' he tweeted.
Initial reaction to the 90-day truce buoyed major Asian markets after the weekend break.
Chinese news outlets also claimed both sides plan to eliminate all tariffs, which doesn't appear in the USA statement.
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China has hit back with similar tariffs on $110 billion worth of goods made in the United States.
However, he has faced fierce criticism from USA business groups, as the tariffs lead to reduced exports of crops such as soybeans, while raising costs for businesses that rely on Chinese imports.
"Trump's latest tweets this morning, which touted the benefits of the agreement for U.S. farmers and his own prowess as a dealmaker, suggest he will be reluctant to walk away from negotiations for a second time", he said.
In China, Hong Kong's Hang Seng index and Shanghai Composite were up more than 2% in early trading, while Japan's Nikkei 225 rose more than 1%. If an agreement isn't reached by the end of the period, current 10% tariffs on $US200 billion Chinese imports will jump to 25%, the White House said.
The US-China ceasefire raises prospects for a larger deal to resolve the trade war between the two countries and US grievances over China's alleged unfair trade practices.
"This Statement is not a formal agreement, but the tone and direction seems very constructive for semis", said Stein in a note out on Monday.
Mnuchin, in an interview with CNBC on Monday, put a US$1.2 trillion price tag on China's additional trade commitments, but emphasized the details of how they get there still need to be negotiated.
Farmers sold $19.6 billion in products to China previous year, according to the Farm Credit Administration Office of Regulatory Policy. While the U.S. and China have agreed to negotiate, China appears unlikely to fundamentally alter its policies, and it is unclear whether Trump will be satisfied with a deal that falls considerably short of his demands.