US-China Extend Tariff Truce for 90 Days Ahead of Holiday Season

The United States and China have agreed to extend their tariff truce for an additional 90 days. Originally set to expire on Aug. 12, the agreement now runs until Nov. 10, ensuring that key imports such as electronics, apparel, and toys enter the United States with reduced tariff rates in time for the critical Christmas season. In parallel, China’s Commerce Ministry announced a matching 90-day suspension of additional tariffs and postponed the inclusion of US firms on trade and investment restriction lists updated in April.

The truce prevents US tariffs on Chinese goods from escalating to 145%, and Chinese tariffs on American products from rising to 125%, levels that would have effectively crippled bilateral trade. For now, tariffs remain capped at 30% on Chinese imports and 10% on US goods entering China.

Despite progress, President Trump’s executive order emphasized that “the United States continues to have discussions with the PRC to address the lack of trade reciprocity in our economic relationship and our resulting national and economic security concerns.”

Previously, Trump had pressed China to quadruple its soybean purchases, a demand analysts considered unlikely to be met. Kelly Ann Shaw, Senior White House trade official during Trump’s first term, remarked. “It would not be a Trump-style negotiation if it did not go right down to the wire,” suggesting that Trump likely used the extension as leverage to secure further concessions. However, this demand was not mentioned in the announcement of the extension.

Xu Tianchen, Senior Economist, Economist Intelligence Unit in Beijing, noted that Trump’s refusal to lift the 20% tariff on Chinese goods linked to fentanyl concerns indicates both sides believe they can endure the ongoing trade tensions. “If (Trump) escalates, he will struggle to gain an upper hand over China, which has many cards to play,” Xu said.

In the short term, Washington is expected to maintain pressure on Beijing to halt its purchases of Russian oil, threatening secondary tariffs to influence China’s position on the conflict in Ukraine.

Recent data shows China’s exports to the United States declined 21.7% year-on-year last month, while shipments to Southeast Asia surged 16.6%, reflecting manufacturers’ shift toward alternative markets. At the same time, US figures indicate the trade deficit with China narrowed to its lowest level in over two decades.