US, China extend tariff truce for 90 days.

US, China extend tariff truce for 90 days.

The tariff truce between Beijing and Washington, originally scheduled to conclude on August 12, has been a crucial pause in escalating trade tensions between the world’s two largest economies. Without the recent 90-day extension, US tariffs on Chinese imports would have reverted to the steep peak levels imposed in April, significantly impacting global trade. This temporary reprieve offers both nations a limited window to continue negotiations, address longstanding disputes, and potentially avoid another costly tariff escalation.

US Extends Tariff Truce with China by 90 Days, Aiming to Calm Global Markets

In a significant move aimed at preventing a fresh escalation in trade tensions, US President Donald Trump has announced a 90-day extension to the tariff truce with China, pushing the deadline for renewed hostilities to November 10. The decision, confirmed late Monday, temporarily stalls what could have been the resumption of one of the most bruising tariff wars between the world’s two largest economies in recent history.

The announcement was made both through official White House channels and personally by Trump on his Truth Social account. The statement was concise, but the underlying implications are broad — affecting not just the two nations but the global economy at large.

The Ministry of Commerce in Beijing announced that it would likewise suspend additional tariffs on US goods for the same 90-day period, signaling a reciprocal effort to maintain the fragile peace in trade relations.

A Breathing Space in a Long-Running Dispute

The tariff truce, originally set to expire on August 12, has served as a temporary pause in the long-standing trade dispute that has seen tariffs rise sharply on both sides since 2018. Without this extension, tariffs on Chinese goods entering the US would have reverted to their peak levels seen in April — with some rates as high as 145% on certain categories of imports. Those April hikes had already drawn strong criticism from US manufacturers, importers, and agricultural exporters, many of whom warned of severe supply chain disruptions and higher prices for consumers.

For China, the stakes have been equally high. Earlier retaliatory moves included restrictions on exports of rare earth minerals — crucial materials for industries ranging from electric vehicles to smartphones — which rattled US technology and manufacturing sectors. The possibility of those restrictions being tightened or expanded had been hanging over the markets as the August 12 deadline approached.

By agreeing to this extension, both Washington and Beijing appear to be sending a message: while fundamental disagreements remain, neither side is eager to provoke a full-scale trade confrontation right now.

In early trading on Tuesday, Asian markets posted modest gains, with the Shanghai Composite Index up 1.4% and Hong Kong’s Hang Seng Index rising nearly 2%. US stock futures also showed an uptick, reflecting investor relief that an immediate escalation had been avoided.

Analysts say the move is likely to stabilize sentiment, at least temporarily. “The 90-day extension buys time for negotiations and reduces the short-term risk premium that had been building into equity and currency markets,” said Lisa McAllister, a senior trade policy analyst at GlobalView Economics. “But it’s not a resolution — it’s just another chapter in what has become a very long story.”

Indeed, the relief in financial circles is tempered by the recognition that this truce is only temporary. Investors, manufacturers, and exporters are now keenly watching for signs of whether the additional three months will be used for substantive talks or whether the two sides will simply return to the brink in November.

The Domestic Political Angle

For President Trump, the extension comes at a politically sensitive moment. With the US presidential election cycle ramping up, maintaining a degree of economic stability has clear political benefits. The trade war with China has been a signature issue for Trump, appealing to voters who support his “America First” agenda but also creating headaches for industries dependent on global supply chains.

Extending the truce allows Trump to claim he’s protecting American interests while avoiding another market downturn — at least for now. His administration has framed the move as a “pragmatic decision” designed to protect US businesses while leaving all other parts of the trade agreement intact.

In China, the leadership under President Xi Jinping faces its own balancing act. The Chinese economy has been under pressure from slowing domestic growth, a weakening property market, and lingering effects of post-pandemic disruptions. Maintaining stable trade with the US — still China’s largest export market — is critical to avoiding further economic headwinds.

What Happens Next?

The big question now is whether the 90 days will lead to a broader resolution. Trade experts say the most optimistic outcome would be a new framework deal addressing at least some of the contentious issues that have fueled the dispute, including intellectual property rights, market access, and subsidies to state-owned enterprises.

However, past experience offers reasons for caution. Several previous rounds of talks have collapsed over deep differences in negotiating positions, particularly on enforcement mechanisms and structural reforms.

Still, some see opportunities for progress. “Both sides have economic incentives to find common ground right now,” said Dr. Anthony Hsu, a former US trade negotiator. “The US wants to keep inflation in check, and China wants to maintain export growth. That gives them overlapping interests, even if the politics remain complicated.”

For now, businesses on both sides of the Pacific are making the most of the pause. Importers are rushing to take advantage of the lower tariff environment, while exporters are pushing to fill orders before the deadline looms again in November.

A Fragile Peace

The current extension does not erase years of trade friction, nor does it guarantee future stability. It does, however, create a fragile window for dialogue at a time when both economies — and the global market — could use some relief from uncertainty.

As one Hong Kong-based trader put it, “Ninety days may not sound like much, but in this business, it’s the difference between chaos and calm.”

Whether the calm will hold — or merely set the stage for another storm — will depend on what happens behind closed doors in the months ahead.