The US and China both reported "substantial progress" after two days of talks in Switzerland aimed at defusing a trade war, marking what Chinese Vice Premier He Lifeng called an "important first step" toward resolving differences.

While neither side immediately announced specific steps on Sunday, He said the world's two largest economies agreed to set up a mechanism for further talks, led by US Treasury Secretary Scott Bessent and himself. Bessent said the US would share details on Monday and He promised a joint statement.

"As we say in China, if the dish is delicious, the timing doesn't matter," Chinese Vice Commerce Minister Li Chenggang told reporters in Geneva. "Whenever it's released, it will be good news for the world." Negotiators sought to strike a positive tone in separate comments to reporters, with He praising the professionalism of the US side and US Trade Representative Jamieson Greer suggesting that trade clashes between the two sides may have been exaggerated.

"It's important to understand how quickly we were able to reach a deal, which reflects that perhaps the differences are not as big as one might think," Greer said. "Nevertheless, there was a lot of groundwork done over the past two days."

As the trading week got underway in Asia, the dollar strengthened against most major currencies including the euro, yen and Swiss franc. The Australian dollar, seen as a proxy for sentiment toward China, strengthened along with the offshore Chinese yuan.

"While we remain skeptical that anything substantial can be agreed after just two days of talks, it is clear that both sides are keen to de-escalate the situation," Win Thin, chief global market strategist at Brown Brothers Harriman & Co., wrote in a note. The announcement followed an hours-long meeting between Bessent, Greer and He, hosted by the Swiss ambassador to the United Nations, whose residence served as the meeting venue. Bessent and He both said the two sides made "substantial progress." Tensions between the world's two largest economies reached a new high after President Donald Trump gradually increased tariffs on Beijing to 145%. The tariffs are supposed to address China's role in the fentanyl trade, its large trade surplus with the U.S., and respond to Beijing's retaliatory measures imposed after Trump's opening salvo. China in response increased its tariffs on U.S. goods to 125%. (Newsmaker23)

Source: Bloomberg