Investors have been on a rollercoaster ride since Donald Trump unveiled eye-watering tolls on trading partners on April 2, with the heftiest saved for Beijing, raising concerns of a trade war between the economic superpowers.
The US president eventually hiked the measures against China to 145 percent, which were met with retaliatory rates of 125 percent.
However, there have been signs of an easing of tensions and after two days of highly anticipated negotiations in Geneva, the two countries hailed progress towards ending a crisis that fuelled fears of a global recession.
On Monday the two said they would slash their levies to cool tensions and give officials time to resolve their differences.
In a joint statement, the US side said it would reduce tolls to 30 percent while Chinese tariffs on American goods would be cut to 10 percent.
That came after US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer met Chinese Vice Premier He Lifeng and international trade representative Li Chenggang in the first known talks since Trump's "Liberation Day" announcement.
"We've made substantial progress between the United States and China in the very important trade talks," Bessent told reporters, while the White House has hailed what it called a new "trade deal".
China on Monday also hailed "substantial progress", with the commerce ministry saying the move "is in the interest of the two countries and the common interest of the world".
Tai Hui, Asia-Pacific chief market strategist at JP Morgan Asset Management, said: "The magnitude of this tariff reduction is larger than expected. This reflects both sides recognising the economic reality that tariffs will hit global growth and negotiation is a better option going forward.
"The 90-day period may not be sufficient for the two sides to reach a detailed agreement, but it keeps the pressure on the negotiation process."
Hong Kong led Asian markets higher, jumping three percent, while Shanghai -- which closed before the tariff cuts were announced -- also enjoyed healthy buying interest.
Tokyo, Sydney, Seoul, Taipei and Wellington were all in the green.
Paris and Frankfurt rose more than one percent, while London was also higher.
US futures surged more than one percent.
Mumbai jumped more than three percent after India and Pakistan agreed a ceasefire at the weekend following four days of missile, drone and artillery attacks between the two countries which killed at least 60 people and sent thousands fleeing.
Pakistan's stock exchange rocketed more than nine percent.
Oil prices, meanwhile, jumped more than two percent on speculation that the easing of China-US tensions would help demand.
The dollar also advanced one percent against the euro and yen.
Gold, which rallied last month over a rush to safe havens, extended losses.
"The initial reaction to the weekend US-China talks (is) predictably encouraging," said Chris Weston at Pepperstone.
However, Karsten Junius at Bank J. Safra Sarasin was cautious.
"We expect financial markets to remain volatile over the coming months, as they have almost fully priced out negative economic surprises and could once again be disrupted by more serious obstacles in trade negotiations," he said in a commentary.
"In all likelihood, things may still get worse before they get better."
Investors are also awaiting the release this week of data on US inflation and retail sales, which will provide a fresh snapshot of the world's biggest economy since the tariffs were first unveiled.
- Key figures at around 0810 GMT -
Tokyo - Nikkei 225: UP 0.4 percent at 37,644.26 (close)
Hong Kong - Hang Seng Index: UP 3.0 percent at 23,549.46 (close)
Shanghai - Composite: UP 0.8 percent at 3,369.24 (close)
London - FTSE 100: UP 0.5 percent at 8,593.36
Euro/dollar: DOWN at $1.1102 from $1.1257 on Friday
Pound/dollar: DOWN at $1.3166 from $1.3308
Dollar/yen: UP at 147.99 yen from 145.31 yen
Euro/pound: DOWN at 84.31 pence from 84.57 pence
West Texas Intermediate: UP 2.6 percent at $62.60 per barrel
Brent North Sea Crude: UP 2.5 percent at $66.51 per barrel
New York - Dow: DOWN 0.3 percent at 41,249.38 (close)
dan/fox
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