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Will tariffs increase or stay the same?
Currently, both the US and China have agreed to extend their tariff truce beyond August 12, which means no new tariffs are expected in the short term. However, the situation remains fragile, and future tariffs could be reintroduced if negotiations break down or disagreements escalate. The extension is a temporary measure aimed at giving both sides more time to negotiate structural issues.
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How long will the trade truce last?
The latest negotiations in Stockholm resulted in a three-month extension of the tariff truce. This period allows both countries to continue discussions without the threat of new tariffs, but it is not a permanent solution. The future of the truce depends on the progress made during these negotiations and whether both sides can reach a broader agreement.
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What are the main sticking points in negotiations?
Key issues include overcapacity and market access, technology restrictions, and agricultural trade, especially soybean imports. The US is also concerned about China's domestic demand and overcapacity issues, while China aims to stabilize its slowing economy. Disagreements over these structural issues are making negotiations complex and fragile.
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How does this affect American and Chinese businesses?
The extension of the trade truce provides temporary relief for businesses by avoiding new tariffs, which helps maintain supply chains and trade flows. However, ongoing uncertainties mean companies must stay alert to potential changes. US farmers, especially soybean producers, are hoping for increased exports, while Chinese companies are cautious about future tariffs and restrictions.
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Could there be a full trade war again?
While both sides are currently trying to avoid escalation, the negotiations are fragile. If disagreements deepen or key issues remain unresolved, there is a risk of tariffs returning and a full trade war resuming. The next few months will be critical in determining whether a lasting agreement can be reached.
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What role do political and strategic factors play?
Trade negotiations are influenced by broader strategic concerns, including regional alliances, supply chain de-risking, and geopolitical tensions. US efforts to diversify trade partnerships and China’s focus on domestic demand and overcapacity are shaping the negotiations. These factors add layers of complexity beyond just tariffs and trade policies.