Washington, Aug 12: The United States and China have agreed to extend their tariff truce for another 90 days, avoiding a surge in duties that could have amounted to a near trade embargo between the world’s two largest economies.
U.S. President Donald Trump announced late Monday that he had signed an executive order delaying higher tariffs until 12:01 a.m. EST on Nov. 10. China’s Commerce Ministry issued a parallel suspension early Tuesday, also postponing for 90 days its planned addition of certain U.S. firms to trade and investment restriction lists.
The extension prevents U.S. tariffs on Chinese goods from jumping to 145% and Chinese duties on U.S. goods from hitting 125%. Instead, existing rates — 30% on Chinese imports to the U.S. and 10% on U.S. goods entering China — will remain in place during the pause.
“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,” Trump’s order stated. He said China “continues to take significant steps toward remedying non-reciprocal trade arrangements.”
The original truce, set to expire Tuesday, was reached in May during talks in Geneva, with the aim of allowing more time for negotiations. Officials met again in Stockholm in late July, and U.S. negotiators recommended Trump approve the extension.
“This will undoubtedly lower anxiety on both sides as talks continue,” said Ryan Majerus, a former U.S. trade official, adding it gives room to work toward a “framework deal in the fall.”
Trump, speaking at a news conference Monday, pointed to his “good relationship” with Chinese President Xi Jinping and told CNBC last week that the two could meet before year-end if a trade deal is reached. China described the move as “a measure to further implement the important consensus reached by the two heads of state during their June 5 call” and said it would help stabilize the global economy.
The extension is seen as critical for U.S. retailers preparing for the end-of-year holiday season, enabling electronics, apparel, and toys to enter at lower tariff rates. “It wouldn’t be a Trump-style negotiation if it didn’t go right down to the wire,” said Kelly Ann Shaw, a former White House trade official, noting Trump likely pushed Beijing for additional concessions before agreeing.
Wendy Cutler, a former senior U.S. trade negotiator now with the Asia Society Policy Institute, called the move “positive news,” citing recent de-escalatory steps on both sides.
Commerce Department data show the U.S. trade deficit with China narrowed by roughly a third in June to $9.5 billion, its lowest since February 2004. Over the past five months, the gap has shrunk by $22.2 billion, a 70% reduction from a year earlier.
Washington has also pressed Beijing to halt Russian oil purchases, warning of potential secondary tariffs in response to Moscow’s war in Ukraine.
