Trump Expands U.S.-China Trade Ceasefire for 90 Days, Postponing Tariff Clash
The US-China trade truce extension, announced by President Donald Trump in August 2025, offers a temporary reprieve in the long-running economic rivalry between the two nations. This extension comes amidst ongoing disputes over trade reciprocity, intellectual property protections, forced technology transfer, market access, and China's industrial subsidies.
The tariff levels on US imports from China were set to rise significantly, with US tariffs on Chinese goods poised to rise from about 30% up to potentially 245%, while China threatened retaliation up to 125% tariffs on US goods. However, the extension halts these planned sharp tariff increases, providing a breathing space for US businesses to reassess their operations, supply chain strategies, and pricing models.
The core issues underlying this extension remain unresolved, and both sides remain cautious without a concrete long-term resolution. The dialogue continues under close political scrutiny, with President Trump maintaining final approval power. The extension leaves the door open for a potential summit between Trump and Chinese President Xi Jinping.
The potential outcomes of this extension include short-term stability for businesses due to suspended tariff hikes, allowing continued talks toward a more durable agreement. It forestalls the planned dramatic tariff escalation that could have severely disrupted trade flows. The US agricultural sector stands to gain from expanded Chinese purchases of soybeans, corn, and pork.
The extension created a wave of market optimism by reducing immediate uncertainty and preventing a looming tariff escalation that had caused heightened market anxiety and threatened global supply chains. The announcement that Trump extends US-China trade truce for 90 days offers a temporary reprieve amid ongoing geopolitical trade tensions.
However, the broader trend of increasing economic nationalism and trade tension remains, implying potential ongoing volatility and risks. The Trump administration’s broader tariff policies in early 2025 had already contributed to high effective tariff rates and a U.S. stock market crash in April 2025. Therefore, this extension is viewed as a crucial pause rather than a solution.
The US-China Business Council describes the extension as "critical" for businesses to make medium- and long-term plans. The history of US-China trade negotiations under Trump's presidency shows a pattern of short-term truces followed by renewed confrontations. The International Monetary Fund has warned that a collapse in US-China trade could shave nearly 0.8% off global GDP growth over two years. Beijing had been preparing retaliatory levies targeting American agricultural and industrial exports.
Rare earths, vital for the production of electric vehicles, advanced electronics, and military equipment, are another point of contention. China controls over 60% of the world's rare earths production and 85% of processing capacity. If the deeper issues like technology transfer, state subsidies, and geopolitical alignments are not addressed, the truce may simply be a prelude to another escalation.
In conclusion, the August 2025 tariff truce extension chiefly halts planned tariff escalations, reflects careful yet unresolved negotiations on critical trade disputes, and temporarily stabilizes global markets by averting greater trade war shocks amid ongoing geopolitical trade tensions. The ultimate test will be whether both nations can move from temporary pacts to lasting frameworks that stabilise one of the world's most consequential economic relationships.
References: 1. CNN 2. Bloomberg 3. Reuters 4. The Wall Street Journal 5. The New York Times
- The US-China trade truce extension, announced by President Trump in August 2025, is taking place against a backdrop of ongoing policy-and-legislation debates and general news about the economic rivalry between the two countries.
- As both nations continue negotiations on the core issues, such as trade reciprocity, intellectual property protections, forced technology transfer, market access, and industrial subsidies, they face consistent scrutiny from the politics surrounding their trade relations.
