The United States and China have agreed to a 90-day ceasefire in their trade war, giving the sides time to continue negotiations, in a move that will likely be welcomed by markets and farmers. 

The announcement followed talks between US President Donald Trump and Chinese leader Xi Jinping in Argentina at the close of the G20 summit. The meeting lasted more than two hours.

Trump agreed that on January 1 he would leave the recently increased tariffs on 200 billion worth of Chinese product at 10 per cent and not raise the rate to 25 per cent, as he had threatened.  

Negotiations between the sides in the next three months will also look at intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft. 

The White House warned that if the sides could not reach a deal in the allotted time frame, the tariffs would go up. 

China will also increase its imports from the US to improve the trade balance between the countries. 

"China has agreed to start purchasing agricultural product from our farmers immediately," the White House said. Further down the line Beijing will also add "very substantial" amounts of agricultural, energy, industrial, and other products to its imports. 

Chinese Foreign Minister Wang Yi confirmed the pause in the trade war and described the working dinner between the presidents as "very positive and constructive." 

He said the sides would also work to scale back the increased duties rate. By holding dialogue "as equals" the two countries could find "win-win solutions to their problems," he told reporters in Buenos Aires.

Beijing has also agreed to re-examine the acquisitIon of Dutch firm NXP Semiconductors by US company Qualcomm, the world’s largest smartphone chip company, according to the White House.

The 44-billion-dollar deal fell apart in July when Chinese regulators failed to give their approval in what has been called one of the largest casualties of the US-China trade war.

"This was an amazing and productive meeting with unlimited possibilities for both the United States and China," Trump was quoted as saying in the White House statement.

The White House also said Xi had made "a wonderful humanitarian gesture" by agreeing to designate Fentanyl, a highly-addictive synthetic opioid, as a controlled substance. 

The US is currently dealing with a serious and lethal opioid epidemic, which Trump has promised voters he will tackle. 

Markets were worried a bad meeting would mean a further increase on in tariffs and perhaps even a fresh set of duties on another 250 billion dollars worth of products, as previously threatened by Trump. 

The US accuses China of engaging in unfair trading practices and not enforcing intellectual property rules.

China has hit back at the US tariffs with trade measures of its own, including against US agriculture and industry. China raised tariffs on soybeans to 25 per cent. That product alone is worth billions in bilateral trade.