The U.S. and China have agreed to slash tariffs on each other for 90 days while negotiating a trade deal, the two sides said early today.

Why it matters: The trade war between the two largest economies brought the world to the brink of recession and threatened to scramble the global economic order.

• Supply chain experts and retailers have said the U.S. was a few weeks away from empty shelves and soaring prices, on par with the pandemic, as trade all but stopped.

The big picture: Treasury Secretary Scott Bessent told reporters in Geneva early today that tariffs would come down by 115 percentage points for three months, to 30% on the U.S. side and 10% on the Chinese side.

• "We had very robust discussions, Both sides showed great respect to what was a very positive process," Bessent said. Further talks are to come, both sides said in a joint statement.

Catch up quick: A series of tit-for-tat trade retaliations in recent months left the U.S. and China with what Bessent has called an effective "trade embargo," as tariffs rose to the point of choking off business between the countries.

• The Federal Reserve, in a new research paper Friday, indicated tariffs on China had already started to push consumer prices higher, and that was even before the most recent 145% levies went into effect.
• Cargo traffic into the Port of Los Angeles, the largest U.S. container port, has been plunging, and retailers have made clear that price hikes will be inevitable as tariffs start to squeeze their margins.

By the numbers: Stocks surged with S&P 500 futures rising more than 3%.

• The dollar, whose position as the global reserve currency has been dented by the tariff drama, rallied as well.

So much for taxing the rich. House Republicans late Sunday unveiled $880 billion in Medicaid cuts, the cost-saving center of their hotly anticipated tax legislation.

• That follows a preliminary partial draft released earlier in the weekend from the House committee that oversees taxes, with cuts for the upper-middle class and wealthy.

Why it matters: There is still much left to be decided and negotiated, but these drafts provide clues about who's to benefit from the coming "big beautiful" bill.

• The Medicaid cuts include work requirements that will likely lead to higher hurdles for folks on the program. It's a way to reduce benefits without outright eliminating them.
• Republicans want to extend the 2017 Tax Cuts and Jobs Act, which is set to expire, and do some additional cuts as well. But the realities of their slim majority are not going to make it simple.

Zoom out: The idea of taxing the rich seemed to be on the table last week, but there's no sign of it in the draft legislation.

• It includes some goodies for the rich, as well as a few things that would benefit more modest earners, but those are temporary.

What's in it: The draft legislation would extend the cuts in the 2017 tax bill, and it adds on some more breaks.

• Some will benefit the wealthiest, including a permanent increase to the deduction for pass-through income to 22% from 20%, plus a hike for the estate tax exemption, which would shield more inheritances from taxes.
• Others are more targeted for the middle- and upper-middle class. Notably, the draft would boost the standard deduction for four years to $16,000 for individuals from $15,000, and $32,000 for married couples from $30,000.
• It would also temporarily raise the child tax credit from $2,000 to $2,500 per child. That will not do anything for families who already too poor to take advantage of the full tax break, an issue targeted temporarily in 2021.
• The proposed increase effectively leaves out 17 million children, according to an estimate from Bobby Kogan, senior director of federal budget policy at the left-leaning Center for American Progress.

What they're saying: Republican lawmakers framed the Medicaid changes as a way to target "fraud and abuse" and preserve the program for those who are unable to work.

• "Washington can't afford to undermine the program further by subsidizing capable adults who choose not to work," Rep. Brett Guthrie (R-Ky.) wrote in a Wall Street Journal opinion piece on Sunday.

The intrigue: The increase in the child tax credit comes with a big hitch.

• To claim it parents must have Social Security numbers, meaning the U.S. citizen children of undocumented parents would not receive the break.
• 4.5 million U.S. citizen kids would likely lose out, per a recent estimate.

President Trump has proposed eliminating taxes on tips, overtime pay and Social Security benefits. None of this is mentioned in the tax bill draft.

• It also does not mention the state and local tax deduction, which is better known as SALT.

Why it matters: The cap on SALT is one of the most hotly contested tax breaks among Republicans.

• More details on these items could drop as soon as today, observers say.

As it stands, the draft released would add $5 trillion to the primary deficit through 2034, per a new analysis from the Committee for a Responsible Federal Budget. That is close to $2 trillion more than current policy.

• "So far this costly bill appears to double down on trickle down, with huge tax cuts that will further enrich the rich and not much for the rest of us," Amy Hanauer, the executive director of the Institute on Taxation and Economic Policy, said in a statement over the weekend.
• "The top 0.1% of Americans get more from this tax bill than the bottom half of America combined," Bobby Kogan at the Center for American Progress, a former Office of Management and Budget staffer, told Axios.

What's next: The full committee is set to debate and advance the legislation tomorrow.