Asia's stock markets greeted the news with significant price rises.
Under the deal, China will boost imports of U.S. farm products, open its financial markets and take steps to enforce intellectual property rights protection.
The agreement, if formalized, will mark the first time the two sides have scaled back their tit-for-tat tariff war that started in July last year.
As part of the deal, the U.S. will also roll back some of the existing tariffs. China has reportedly agreed to $50 billion worth of U.S. agricultural purchases in 2020 -- the year of the American presidential election -- as its end of the deal.
Stock markets across Asia jumped in response, as hopes grew that the deal would help support the world's second largest economy, which has been decelerating fast recently. "Dec. 15 was the biggest risk for the market," said Takeo Kamai, a trader at CLSA in Tokyo. "With Trump's announcement this morning, that has been relieved and gives way to risks being put back on toward the year-end."
In Hong Kong, the Hang Seng Index was up 1.9%, while in mainland China the Shanghai Composite Index was up 0.7%. In Singapore, the Straits Times Index was up 0.7%, while in Tokyo the Nikkei Stock Average closed the morning session up 2.4% at 23,994.59, above this year's closing high.
In South Korea, the KOSPI index hit a seven-month high, while the Korean won gained 1.2% against the dollar.
The decision came after Trump met with trade advisers U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.
Trump tweeted on Thursday morning that the U.S. and China were getting "VERY close to a BIG DEAL," news that sent both the Dow Jones Industrial Average and the S&P 500 surging, as China-related stocks soared, including construction equipment maker Caterpillar.
Washington was set to impose on Sunday additional 15% duties on $160 billion worth of Chinese goods, mostly consumer goods such as smartphones, toys and clothing.
The two sides had been working to pin down a partial "phase one" agreement that would address issues such as currency policy and Chinese purchases of American agricultural goods.
"They want it, and so do we!" Trump said in the morning tweet.
For the markets, the coast is not clear yet.
"Trump has been very strategic in the way he put (the agreement) into several stages," CLSA's Kamai said, adding that Trump is likely to use the trade card to the advantage of his re-election bid next year. "There are plenty of risks out there."
Source: Nikkei Asian Review