The US has pulled back from starting a trade war with China that could have sent shockwaves through the global economy.
It has agreed to put proposed tariffs on Chinese imports “on hold” after treasury secretary Steven Mnuchin said negotiations with the Chinese had progressed.
It means any moves by Washington and Beijing to impose tariffs on each other’s exports has been stalled.
Mr Mnuchin said that despite not getting China to reduce its overall trade surplus with America by a specified amount, US officials had thrashed out a number of commitments on a framework for reducing the deficit over time.
These include large increases in purchases of farm products and a doubling of purchases of US energy products.
Mr Mnuchin said: “We are putting the trade war on hold, right now, we have agreed to put the tariffs on hold while we try to execute the framework.”
Image: Steven Mnuchin says a framework has been agreed with China
In a statement, the two sides said they had reached a consensus on taking effective measures to cut the US trade deficit in goods with China.
They said: “To meet the growing consumption needs of the Chinese people and the need for high-quality economic development, China will significantly increase purchases of United States goods and services.”
The US is to send a team to China to thrash out the details.
Donald Trump has said he wants to see a $200bn (£148bn) reduction target.
Last year, the US had a record deficit with China in merchandise trade of $375bn (278bn) – the largest of any country.
Mr Trump campaigned in 2016 on a pledge to get tough on China and other US trading partners.
The president believes the massive US trade deficit with China is proof that Beijing is engaged in abusive trading practices and has outmanoeuvred previous administrations in Washington.
Economist Eswar Prasad, of Cornell University, said: “It is likely that this agreement, weak and vague though it is, will serve as grounds to at least delay the imposition of tariffs.”
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Meanwhile, Mr Trump has said he will “demand” the Justice Department open an investigation into whether the FBI infiltrated his presidential campaign for political purposes.
He wrote on Twitter: “I hereby demand, and will do so officially tomorrow, that the Department of Justice look into whether or not the FBI/DOJ infiltrated or surveilled the Trump Campaign for Political Purposes – and if any such demands or requests were made by people within the Obama Administration!”