The United States and China have agreed to an initial trade deal that will result in a reduction of tariffs and purchases of American farm goods, marking a significant de-escalation in the 19-month battle that has rattled the world economy.

“We have agreed to a very large Phase One Deal with China,” President Donald Trump said in a tweet. “They have agreed to many structural changes and massive purchases of agricultural products, energy and manufactured goods, plus much more,” he added.

Trump said the US would reduce its overall tariff rate on Chinese goods to 7.5 per cent, down from the current rate of 25 per cent and that a round of tariffs scheduled for Sunday would be cancelled.

Wang Shouwen, China’s vice-commerce minister, said at a news conference in Beijing that the two sides had made “significant progress” and that the agreement would result in the US removing some of the tariffs it has placed on $360 billion worth of Chinese goods. Those tariffs would come off “phase by phase” and the US would agree to exempt more Chinese products from being taxed, he said.

“This will create better conditions for China and the United States to strengthen co-operation,” Wang said. The agreement includes a commitment by Beijing to buy more American agricultural products and to strengthen laws protecting foreign companies operating in China as well as beefing up intellectual property rules and providing more transparency around currency movements.

Wang said both sides have agreed to complete legal reviews as quickly as possible and that an official signing was still being worked out.

Some advisers to the White House said China had agreed to buy $50 billion worth of American farm products next year but China has so far not confirmed that figure and the United States Trade Representative did not provide an official figure in its statement.