The United States and China have extended their trade truce for another 90 days, suspending planned tariff hikes just hours before they were set to take effect, according to a joint statement from both nations.

The agreement keeps U.S. tariffs on Chinese imports at 30% and Chinese tariffs on American goods at 10%, averting a potential escalation that could have seen tariffs soar to 145% and 125%, respectively.

The decision follows “constructive” talks last month, with both sides expressing commitment to resolving trade imbalances and unfair practices. The White House highlighted the U.S.’s nearly $300 billion trade deficit with China in 2024, the largest with any trading partner, as a key issue. Negotiations will focus on increasing U.S. exporters’ access to Chinese markets, addressing national security concerns, and stabilizing global semiconductor production.

On Monday, President Donald Trump signed an executive order formalizing the truce extension. While he described recent dealings with China as “going nicely,” he stopped short of committing to further extensions, urging Beijing to boost purchases of U.S. soybeans.

Trade tensions flared in April when Trump announced sweeping tariffs on global imports, with China facing some of the steepest levies. Beijing retaliated, triggering a tit-for-tat spiral that nearly halted bilateral trade. A May agreement in Geneva scaled back some measures, leaving the current 30% and 10% tariffs in place.

Despite the truce, trade flows have suffered. U.S. imports from China dropped to $165 billion in the first half of 2025, down 15% from the previous year, while U.S. exports to China fell 20% over the same period, according to U.S. government data.

The talks will also address contentious issues, including China’s rare earths access, its Russian oil purchases, and U.S. restrictions on advanced technology exports, such as chips. Recently, Trump eased some export curbs, allowing companies like AMD and Nvidia to resume certain chip sales to China in exchange for sharing 15% of revenues with the U.S. government. The U.S. is also pressing for the divestiture of TikTok from its Chinese owner, ByteDance, a move Beijing opposes.

A Chinese embassy spokesperson in Washington emphasized “win-win cooperation” as the path forward, urging the U.S. to lift “unreasonable” trade restrictions to benefit both nations’ companies and global supply chains. The truce extension offers a temporary reprieve, but with unresolved issues looming, the risk of renewed trade turmoil remains. (ILKHA)