US, China Extend Tariff Truce by 90 Days, Staving Off Surge in Duties

The United States and China have extended a tariff truce for another 90 days, staving off triple-digit duties on each other’s goods as U.S. retailers get ready to ramp up inventories ahead of the critical end-of-year holiday season.

U.S. President Donald Trump announced on his Truth Social platform on Monday that he had signed an executive order suspending the imposition of higher tariffs until 12:01 a.m. EST (0501 GMT) on November 10, with all other elements of the truce to remain in place.

China’s Commerce Ministry issued a parallel pause on extra tariffs early on Tuesday, also postponing for 90 days the addition of U.S. firms it had targeted in April to trade and investment restriction lists.

“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 executive order stated, using the acronym for the People’s Republic of China.

US-China Tariff Truce Extended, Easing Trade War Tensions

The tariff truce between Beijing and Washington had been due to expire on Tuesday at 12:01 a.m. EDT (0401 GMT). The extension until early November buys crucial time for the seasonal autumn surge of imports for the Christmas season, including electronics, apparel and toys at lower tariff rates.

The new order prevents U.S. tariffs on Chinese goods from shooting up to 145%, while Chinese tariffs on U.S. goods were set to hit 125% – rates that would have resulted in a virtual trade embargo between the two countries. It locks in place – at least for now – a 30% tariff on Chinese imports, with Chinese duties on U.S. imports at 10%.

There was relief on the streets of China’s capital, where officials are grappling with the challenge Trump’s trade policy poses to the economy’s long-standing, export-oriented growth model.

“I don’t think either China or the United States wants to see their relationship continue to deteriorate,” said Wang Mingyue, a 39-year-old professional working in robotics.

“That’s why both are taking the current approach, but the game and confrontation may not be over yet – so there’s still risk.”

Markets showed optimism for a breakthrough between the two superpowers, with Asian stocks rising and currencies mostly steady, after treading water for weeks.

Trump told CNBC last week that the U.S. and China were getting very close to a trade agreement and he would meet Xi before the end of the year if a deal was struck.

Also Read: China Issues AI Chip Demands to the US Ahead of Trump–Xi Jinping Meeting

 Trump Seeks More Concessions

The two sides announced a truce in their trade dispute in May after talks in Geneva, Switzerland, agreeing to a 90-day period to allow further talks. They met again in Stockholm, Sweden, in late July, and U.S. negotiators returned to Washington with a recommendation that Trump extend the deadline.

Treasury Secretary Scott Bessent has said repeatedly that the triple-digit import duties both sides slapped on each other’s goods in the spring were untenable and had essentially imposed a trade embargo between the world’s two largest economies.

“It wouldn’t be a Trump-style negotiation if it didn’t go right down to the wire,” said Kelly Ann Shaw, a senior White House trade official during Trump’s first term and now with law firm Akin Gump Strauss Hauer & Feld.

She said Trump had likely pressed China for further concessions before agreeing to the extension.

Trump pushed for additional concessions on Sunday, urging China to quadruple its soybean purchases, although analysts questioned the feasibility of any such deal. Trump did not repeat the demand on Monday.

“What is he going to offer in exchange?” said Xu Tianchen, senior economist at the Economist Intelligence Unit in Beijing. “China says: ‘you should allow us to buy more high-tech goods,’ but the U.S. is reluctant.”

Xu said Trump’s refusal to ease his 20% tariff on Chinese goods over fentanyl flows suggested both sides believed they could continue to withstand the trade shock.

“If (Trump) escalates, he will struggle to gain an upper hand over China, which has many cards to play,” Xu said.

Also Read: China Calls US a Bully Amid BRICS Backlash Against Trump’s New Tariffs

China’s US Exports Plunge as Trade Truce Buys Time for Deal

China’s exports to the U.S. fell an annual 21.7% last month, according to the country’s latest trade data, while shipments to Southeast Asia rose 16.6% over the same period as manufacturers sought to pivot to new markets and capitalise on a separate reprieve that allowed trans-shipment to the U.S.

Separate U.S. data released last week showed the trade deficit with China shrank to its lowest in more than 21 years in June.

Still, analysts expect the world’s two largest economies to reach an agreement before long, as their deep interdependence makes pursuing alternative markets unattractive over the long term.

Ryan Majerus, a former U.S. trade official now with the King & Spalding law firm, said the news would give both sides more time to work through long-standing trade concerns.

“This will undoubtedly lower anxiety on both sides as talks continue, and as the U.S. and China work toward a framework deal in the fall,” he said.

Washington has also been pressing Beijing to stop buying Russian oil to pressure Moscow over its war in Ukraine, with Trump threatening to impose secondary tariffs on China.

(Reporting by Trevor Hunniccutt, Andrea Shalal and Joe Cash; additional reporting by David Lawder and Alessandro Diviggiano; Editing by Bernadette Baum, Rod Nickel, Nia Williams, Lincoln Feast and Raju Gopalakrishnan).

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