What's happened
On August 11, 2025, President Trump signed an executive order extending the US-China tariff truce for 90 days, delaying tariff hikes set to expire on August 12. Both countries agreed to maintain reduced tariffs—30% for US on Chinese goods and 10% for China on US goods—while continuing trade negotiations aimed at resolving longstanding disputes and potentially paving the way for a Trump-Xi summit this fall.
What's behind the headline?
Strategic Extension Amid Fragile Talks
The 90-day extension of the tariff truce reflects a pragmatic recognition by both Washington and Beijing that neither side currently holds sufficient leverage to force a comprehensive deal. Despite aggressive tariff policies earlier in the year, the economic realities—such as China's resilient economy and US concerns over national debt and inflation—have tempered expectations for a swift resolution.
Negotiation Dynamics and Leverage
- The US prioritizes increased Chinese purchases of American agricultural and energy products, notably soybeans, but faces inelastic demand and contractual complexities.
- China leverages its position by resisting one-sided concessions, particularly on technology export restrictions, and may demand reciprocal relief as part of any deal.
- The extension buys time for further talks, with Stockholm negotiations signaling cautious progress but no breakthroughs.
Political and Economic Implications
- The truce reduces immediate risks of a renewed trade war that could destabilize global markets.
- It opens the possibility of a high-profile Trump-Xi summit in late 2025, potentially coinciding with regional summits.
- However, deeper structural issues like intellectual property rights and industrial policies remain unresolved, suggesting the trade war's underlying tensions will persist.
Forecast
The extension will likely lead to incremental adjustments rather than a grand bargain. The US may use additional leverage, such as penalties on Chinese purchases of Russian oil, to influence negotiations. Meanwhile, China’s focus on domestic consumption and economic diversification positions it to withstand prolonged trade tensions. Businesses on both sides gain short-term certainty but should prepare for ongoing volatility in US-China trade relations.
What the papers say
The South China Morning Post highlights the cautious optimism surrounding the extension, noting that "neither possessed enough leverage to push the other to make a big compromise" and emphasizing the need for China and America to find ways to coexist amid global tensions. The New Arab and AP News confirm Trump's executive order extending the tariff suspension until November 10, with China reciprocating by maintaining its reduced tariffs and suspending countermeasures, underscoring mutual interest in avoiding escalation.
The Independent provides a detailed context, explaining how the tariffs had reached triple-digit levels before the May truce and quoting experts like Claire Reade who note that "the US has realized it does not have the upper hand." It also discusses the limits of the current deal, with tougher issues like intellectual property and industrial policies remaining unresolved.
Bloomberg and Gulf News report on Trump's openness to allowing Nvidia to sell a scaled-back AI chip in China under a revenue-sharing deal, signaling a nuanced approach to technology exports. Gulf News also notes the potential for a Trump-Xi summit in late October, framing the extension as a strategic move to facilitate broader negotiations.
South China Morning Post's analysis of the negotiation dynamics points out that "Beijing will be a more demanding counterpart this time around," and that "it is difficult to envision a grand bargain to resolve issues once and for all," reflecting the complex and protracted nature of US-China trade relations.
Together, these sources paint a picture of a delicate détente that postpones tariff escalation while leaving fundamental disputes unresolved, with both sides maneuvering for advantage ahead of potential high-level talks.
How we got here
Since early 2025, the US and China imposed escalating tariffs on each other's goods, reaching triple-digit levels that threatened bilateral trade and global markets. In May, both sides agreed to a 90-day truce reducing tariffs to manageable levels and easing export restrictions. This pause was designed to create space for negotiations addressing trade imbalances, technology restrictions, and other contentious issues.
Go deeper
- What are the main sticking points in US-China trade negotiations?
- How will the tariff extension affect global markets?
- What is the significance of the Nvidia chip deal in US-China relations?
Common question
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Why Did the US and China Extend Their Trade Truce?
The US and China recently agreed to extend their trade truce beyond August 12, aiming to prevent escalation amid ongoing negotiations. This move raises questions about what prompted the extension, what it means for global trade, and what issues are still unresolved. Below, we explore the key reasons behind this extension and what it could mean for the future of US-China trade relations.
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What’s Next for US-China Trade Relations?
US-China trade relations are currently in a delicate phase, with recent negotiations extending a tariff truce amid ongoing tensions. Many are wondering whether tariffs will rise, how long the current pause will last, and what this means for businesses on both sides. Here are some key questions and answers to help you understand the latest developments and what they could mean for the future of trade between these two economic giants.
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What’s the Future of US-China Trade and Tariffs?
The ongoing trade tensions between the US and China have kept markets on edge, especially with recent moves to extend trade truce deadlines. Many are wondering whether tariffs will go up or stay the same, and how these negotiations will impact global trade. In this page, we explore the latest developments, what they mean for consumers and exporters, and what to expect next in US-China trade relations.
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