US and China extend tariff truce, averting trade escalation

Tuesday 12 August 2025 - 14:20

By: Dakir Madiha

US and China extend tariff truce, averting trade escalation

The United States and China have agreed to extend their tariff truce for an additional 90 days, preventing a sharp rise in duties that risked further straining trade relations between the two economic superpowers.

US President Donald Trump announced the decision on Monday, revealing an executive order delaying higher tariffs until November 10. This postponement maintains US import duties on Chinese goods at 30%, avoiding a proposed increase to 145%. Hours later, China’s Commerce Ministry confirmed its own pause, keeping tariffs on US imports at 10%, instead of an anticipated jump to 125%.

The original agreement, brokered in May following discussions in Geneva, was set to expire on Tuesday. This extension provides temporary relief for American businesses, particularly retailers, as they prepare for the critical holiday shopping season—a period marked by heightened imports of electronics, clothing, and toys.

A cautious reprieve

In Beijing, the announcement was met with measured optimism, though officials remain wary of the long-term trajectory of negotiations. The extension follows renewed contact between US and Chinese trade negotiators, who also convened in Stockholm in late July. President Trump has hinted at a potential meeting with Chinese President Xi Jinping later this year to finalize a broader trade agreement.

Trade data underscores the economic strain caused by the conflict. Chinese exports to the US plunged 21.7% last month compared to the previous year, while exports to Southeast Asia surged by 16.6% as manufacturers sought alternative markets. Meanwhile, US figures indicate that the bilateral trade deficit narrowed to its smallest margin in over two decades in June.

Geopolitical tensions linger

The tariff extension comes amid heightened geopolitical friction. The US has pressured China to cease purchasing Russian oil, with Trump warning of potential secondary sanctions should those transactions persist.

While the truce temporarily caps tariffs, the question remains whether 90 days will suffice to transform this fragile pause into a sustainable resolution.