The United States and China on Saturday agreed to halt new trade tariffs for 90 days as both nations decided to engage in new trade negotiations, the White House said. The decision came after US President Donald trump and his Chinese counterpart Xi Jinping held talks in Argentina following the G20 summit.

In September, the Donald Trump administration had announced to levy new tariffs of 10% on $200 billion worth of Chinese imports, escalating the trade war between the two countries. The tariff would increase to 25% from January 1, the US administration had said. China had then imposed trade tariffs on $60 billion worth of American goods.

On Saturday, Trump agreed to hold off on plans to raise tariffs to 25% on January 1. In return, Beijing agreed to buy a “very substantial amount” of agricultural, energy and industrial products from the US to reduce huge trade deficit between the two countries. The White House, however, said if at the end of 90 days, the countries are unable to reach an agreement, then 10% tariffs will be raised to 25%.

“This was an amazing and productive meeting with unlimited possibilities for both the United States and China,” Trump said. “It is my great honor to be working with President Xi.”

In August, US and China imposed tariffs on $16 billion (Rs 1.1 lakh crore) worth of each other’s goods. This was the second round of tariffs, with goods worth $50 billion (Rs 3.5 lakh crore) subjected to tariffs on both sides since early July.

Trump has threatened to impose duties on more than $500 billion of Chinese goods exported annually to the US unless Beijing agrees to changes to its intellectual property practices, industrial subsidy programmes and tariff structure.