President Donald Trump has extended the trade truce with China for another 90 days, averting an immediate escalation in tariffs between the world’s two largest economies. The announcement, made on Trump’s Truth Social platform, confirmed that “all other elements of the Agreement will remain the same.” China’s Ministry of Commerce simultaneously declared an extension of the tariff pause.
The previous deadline was set to expire at 12:01 a.m. on Tuesday. Had the truce ended, the US could have increased tariffs on Chinese imports beyond the current 30%, with Beijing retaliating by raising levies on American exports. The extension buys critical time for both sides to negotiate outstanding issues, potentially paving the way for a summit between Trump and Chinese President Xi Jinping later this year. US companies trading with China have welcomed the pause, viewing it as essential to business stability.
Sean Stein, president of the US-China Business Council, described the extension as “critical” for allowing governments to finalise a trade deal that would improve market access and provide certainty for medium- and long-term business planning. In addition, China announced it would ease export restrictions on certain US companies previously affected by export control and “unreliable entities” lists, offering some relief to American businesses.
Despite the temporary reprieve, a comprehensive trade agreement remains elusive. Trump’s administration has disrupted the global trading system by imposing tariffs on almost all countries, pushing the US from one of the most open economies to a protectionist stance. According to Yale University’s Budget Lab, the average US tariff rate has soared from around 2.5% at the start of the year to 18.6%, its highest since 1933.
China, meanwhile, countered by restricting access to rare earth minerals and magnets—essential components in industries from electric vehicles to aerospace. The two nations briefly escalated tariffs to unprecedented heights in May, reaching up to 145% on Chinese goods and 125% on American products. This brinkmanship nearly halted trade entirely and spooked global markets.
In June, a tentative agreement was reached to reduce tariffs and ease tensions. The US agreed to relax export controls on computer chip technology and petrochemical feedstocks, while China promised greater access to rare earth elements for US firms.
Claire Reade, senior counsel at Arnold & Porter and former assistant US trade representative for China affairs, observed that “the US has realised it does not have the upper hand,” signalling a shift in negotiation dynamics.
Trade experts warn that while some progress has been made, fundamental issues remain unresolved. These include China’s intellectual property protections, state subsidies, and industrial policies that Washington argues unfairly advantage Chinese companies, contributing to a US trade deficit of $262 billion in 2024.
Ali Wyne of the International Crisis Group commented, “By overestimating the ability of steep tariffs to induce economic concessions from China, the Trump administration has not only underscored the limits of unilateral US leverage, but also given Beijing grounds for believing that it can indefinitely enjoy the upper hand in subsequent talks.”
Analysts like Jeff Moon, a former US diplomat specialising in China trade, expect the “trade war will continue grinding ahead for years,” with only incremental agreements on issues such as soybean purchases and fentanyl precursor controls.
Stay informed with the latest news and updates from SKN Source! Click here to join our WhatsApp channel and get updates straight to your mobile. Don’t forget to follow us on Facebook for more stories and insights!
Be the first to comment on "US-China Trade Truce Extended for 90 Days to Avoid Escalation"