The United States President Donald Trump extended its tariff truce against China by another 90 days. This move is expected to stabilise trade relations between two of the largest economies in the world and ease market concerns about a renewed conflict.
CNBC reported the decision, citing an official from the White House, and it delays the end of the current truce, which was scheduled to expire on Tuesday.
In May, both countries agreed to reduce tariffs and resume exports of key products in an effort to calm tensions.
The deal saw US tariffs reduced from 145% to 30% on Chinese imports. Beijing also reduced levies to 10% on American products and resumed the shipment of rare-earth magnets that are vital to US manufacturers.
Economic implications of trade talks
This extension comes after a preliminary deal was reached in Sweden last month, when negotiators met for the purpose of securing terms.
The discussions were led by US Treasury Secretary Scott Bessent, and Chinese Vice-Premier He Lifeng in Stockholm. This was the third round in less than 3 months.
It is hoped that the continuation of this pact will give both parties breathing space to resolve unresolved matters, such as duties related to fentanyl, Chinese purchases sanctioned oil and US operations in China.
In the past, financial markets have responded positively to any signs of improvement in US-China trading relations.
Investors around the world were rattled by increased tariff measures in both countries earlier this year.
Although the agreement remains unstable due to geopolitical tensions, this latest development will likely provide stability in the short term.
This decision could also pave way for a possible meeting between Trump, and Chinese president Xi Jinping at the end of October. The event may coincide with an international one in South Korea.
Rare Earths and Semiconductor Disputes
The flow of rare-earth magnets has become a key topic in ongoing discussions. These are vital for industries from electric cars to defense.
The number of shipments from China to US increased to 353 tonnes in June from only 46 tons in may, but still below the pre-control level.
US Trade Representative Jamieson Greer expressed cautious optimism and noted that there have been commitments made to restore the supply chain to its previous stability.
Another flashpoint is the semiconductor industry.
Nvidia Corp., and Advanced Micro Devices Inc. secured export licenses after agreeing to pay 15% of the revenue generated by certain AI chips sold in China to US government.
Trump also showed openness in allowing Nvidia a reduced-size AI chip to be sold to China. This is a possible sign of flexibility with high-tech trading restrictions.
Balance between trade and strategic competitiveness
Although the US government is still concerned about national security, they are willing to extend their cooperation in trade.
Some critics warn that the ease of restrictions on sensitive technology could compromise efforts to curb China’s advancement in key sectors like defense, semiconductors and battery technologies.
Washington and Beijing both appear to be committed to maintaining open negotiations despite these concerns.
Both sides are motivated by economics to keep a certain level of stability, while still navigating the broader strategic rivalry.
The report Trump extends China’s tariff pause to 90 days may change as new developments unfold.
