US tariffs on China set to rise sharply on Aug 12 if no deal is reached

WASHINGTON – A trade truce between the US and China is set to expire on Aug 12 if the two countries do not extend the time for talks or reach a last-minute agreement that would prevent US President Donald Trump from reimposing sharply higher tariffs on Chinese imports and the Chinese retaliating against American goods.

Top economic officials have been working to finalise a provisional agreement to extend the truce that was

reached during meetings in Sweden

in July.

After the talks, Mr Trump’s advisers were optimistic that he would sign off on the arrangement, but thus far he has not publicly granted China an extension.

If the tariffs snap back into place, it would escalate a trade war between the world’s two largest economies that rattled global markets earlier in 2025.

When asked on Aug 11 about the looming deadline, Mr Trump declined to reveal his intentions.

“We’ll see what happens,” he told reporters at the White House. “They’ve been dealing quite nicely – the relationship is very good with (Chinese) President Xi (Jinping) and myself.”

With the clock ticking, Mr Trump on the night of Aug 10 called on China to

quadruple its purchases of American soybeans

and noted that doing so would help reduce America’s trade deficit with China.

“China is worried about its shortage of soya beans,” he wrote on his Truth Social platform in a message directed to Mr Xi. “Our great farmers produce the most robust soya beans.”

The US and China have held three formal rounds of trade talks in 2025 after Mr Trump started ratcheting up tariffs on Chinese imports.

US tariffs on Chinese goods ultimately reached 145 per cent, and China curbed the exports of rare earth magnets that are critical to American manufacturers.

In an effort to de-escalate the tension, a 90-day truce was reached under which the US reduced its China tariffs to 30 per cent while China lowered its tariffs on US goods to 10 per cent and agreed to export the magnets.

After talks in Sweden in late July, Mr Trump’s economic advisers exuded optimism that another 90-day extension would be granted.

Mr Jamieson Greer, the US trade representative, said US tariffs on Chinese imports could increase to 80 per cent in the absence of an agreement, but Treasury Secretary Scott Bessent downplayed that possibility, suggesting that only technical details needed to be addressed.

The scope of the talks have broadened beyond tariffs. Mr Bessent has said he was pressing his Chinese counterparts on US concerns about China’s excess manufacturing capacity and its purchases of oil from Russia and Iran.

US and Chinese officials have been negotiating over US export controls of microchips that China needs to power artificial intelligence (AI) systems.

Despite the Trump administration’s national security concerns over the trade in semiconductors and other products, it has taken a transactional approach to negotiations.

Nvidia and Advanced Micro Devices are

expected to pay the US 15 per cent of the money

they generate from selling AI chips to China, as part of a highly unusual financial agreement with the Trump administration.

The trade talks with China have been on a separate track from negotiations that the Trump administration has been having with other trading partners.

In August, the US announced a flurry of trade deals, with Japan, South Korea and the European Union making big US investment commitments in exchange for lower tariff rates.

At the same time, Mr Trump continues to deploy tariffs as a tool to address virtually any diplomatic issue.

Last week, he doubled tariffs on goods from India to 50 per cent, in part because India refused to curb purchases of Russian oil.

The Trump administration has so far refrained from imposing such tariffs on China, which also buys Russian crude.

Vice-President J.D. Vance said on Fox News on Aug 10 that tariffs on China linked to Russian oil purchases are “on the table” but that Mr Trump has yet to make a decision on the matter because of the complexity of the relationship.

Washington and Beijing reached a broad trade agreement during Mr Trump’s first term that included commitments from China to buy billions of dollars worth of US farm products.

But China did not follow through on that agreement as the Covid-19 pandemic set in and relations between the two countries frayed.

Mr Trump has maintained that he is open to meeting Mr Xi but said last week that he would do so only if the two countries reached a trade pact.

“He asked for a meeting, and I’ll end up having a meeting before the end of the year most likely, if we make a deal,” Mr Trump said of Mr Xi on CNBC last week.

“If we don’t make a deal, I’m not going to have a meeting.” NYTIMES