Trump prolongs U.S.-China trade truce for 90 days, postponing tariff confrontation
In a move to halt the escalation of tit-for-tat tariffs that have strained bilateral ties for years, President Donald Trump has extended the US-China trade truce for another 90 days [1]. This decision comes as a relief for both nations, preventing a potential surge in tariffs that could have approached a trade embargo.
The extension maintains US tariffs on Chinese imports at 30% and Chinese tariffs on US goods at 10%, averting a rise to 145% and 125% respectively [2]. This move provides critical relief to US businesses, especially retailers stocking up for year-end sales, by preventing sudden cost hikes and supply chain uncertainty. However, certain sector-specific tariffs remain elevated, such as a newly imposed 50% tariff on certain copper products starting August 1, 2025 [2].
The truce has prevented further economic disruption and allows ongoing negotiations to continue, with both Washington and Beijing emphasizing economic stability [1][2][3]. Analysts anticipate a potential Trump–Xi summit later this year to further negotiate trade terms. The Trump administration has expressed satisfaction with the current tariff arrangement, describing it as "working pretty well," especially as China has resumed shipments of rare earth magnets to the US after previously agreed countermeasures were lifted [3].
China controls over 60% of the world's rare earths production and 85% of processing capacity, a strategic advantage that the US cannot ignore [1]. The extension leaves the door open for a potential summit between Trump and Chinese President Xi Jinping later in the year.
The tariff truce helps mitigate the risk of intensified trade wars that could have sharply curtailed international trade flows and raised consumer costs. Nevertheless, ongoing tensions and selective tariffs like those on semi-finished copper products and AI-related chips indicate that uncertainty persists [1][2][4]. The deal with NVIDIA and AMD to export AI chips to China under strict conditions reflects the strategic balancing act between trade openness and national security concerns.
The extension sends ripples through financial markets, global supply chains, and multinational corporations. 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 [5]. The truce provides US businesses with exposure to the Chinese market a much-needed breathing space to reassess operations, supply chain strategies, and pricing models.
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. The history of US-China trade negotiations under Trump's presidency shows a pattern: short-term truces followed by renewed confrontations [6]. If Trump extends the US-China trade truce into 2026, it could mark a pivot toward more predictable bilateral engagement [7].
References: 1. CNN 2. Reuters 3. Wall Street Journal 4. The New York Times 5. International Monetary Fund 6. The Budget Lab at Yale University 7. Claire Reade, former US trade representative for China affairs 8. The History of US-China Trade Negotiations under Trump's Presidency 9. If Trump extends US-China trade truce into 2026, it could mark a pivot toward more predictable bilateral engagement
- The extension of the US-China trade truce, as part of ongoing policy-and-legislation discussions, offers temporary economic stability but presents prolonged uncertainty for both nations engrossed in politics and general news.
- The trade truce, in the context of international relations, represents a strategic step toward averting a potential trade embargo while maintaining pressure on specific sectors, as evidenced by the newly imposed 50% tariff on certain copper products and AI-related chips.
