US, China extend tariff truce by 90 days, staving off surge in duties

WASHINGTON – The United States and China extended a tariff truce for another 90 days on Aug 11, staving off triple-digit duties on Chinese goods as US retailers get ready to ramp up inventories ahead of the critical end-of-year holiday season.

US President Donald Trump announced on his Truth Social platform that he had signed an executive order suspending the imposition of higher tariffs until 12.01am Eastern Standard Time on Nov 10, with all other elements of the truce to remain in place.

China’s Commerce Ministry issued parallel moves early on Aug 12, also postponing for 90 days the addition of US 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,” Mr Trump’s executive order stated, referring to China’s formal name the People’s Republic of China.

“Through these discussions, the PRC continues to take significant steps towards remedying non-reciprocal trade arrangements and addressing the concerns of the United States relating to economic and national security matters.”

A tariff truce between Beijing and Washington had been due to expire on Aug 12 at 12.01am Eastern Standard Time.

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 US tariffs on Chinese goods from shooting up to 145 per cent, with Chinese tariffs on US goods set to hit 125 per cent, rates that would have resulted in a virtual trade embargo between the two countries.

It locks in place – at least for now – a 30 per cent tariff on Chinese imports, with Chinese duties on US imports at 10 per cent.

“We’ll see what happens,” Mr Trump told a press conference earlier on Aug 11, highlighting what he called his good relationship with Chinese President Xi Jinping.

China said the extension was “a measure to further implement the important consensus reached by the two heads of state during their June 5 call”, and would provide stability to the global economy.

Mr Trump told CNBC last week that the US and China were getting very close to a trade agreement, and he would meet with Mr Xi before the end of 2025 if a deal was struck.

“It’s positive news,” said Ms Wendy Cutler, a former senior US trade official who is now a vice-president at the Asia Society Policy Institute.

“Combined with some of the de-escalatory steps both the United States and China have taken in recent weeks, it demonstrated that both sides are trying to see if they can reach some kind of a deal that would lay the groundwork for a Xi-Trump meeting this fall.”

Trade ‘detente’ continued

The two sides in May announced a truce in their trade dispute after talks in Geneva, Switzerland, agreeing to a 90-day period to allow further negotiations.

They met again in Stockholm, Sweden, in late July, and US negotiators returned to Washington with a recommendation that Mr 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 Ms Kelly Ann Shaw, a senior White House trade official during Mr Trump’s first term and now with law firm Akin Gump Strauss Hauer & Feld. 

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

Mr Trump pushed for additional concessions on Aug 10, urging China to quadruple its soya bean purchases, although analysts questioned the feasibility of any such deal.

Mr Trump did not repeat the demand on Aug 11.

“The whole reason for the 90-day pause in the first place was to lay the groundwork for broader negotiations, and there has been a lot of noise about everything from soya beans to export controls to excess capacity over the weekend,” Ms Shaw said.

Mr Ryan Majerus, a former US trade official now with law firm King & Spalding, said the news would give both sides more time to work through longstanding trade concerns.

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

Imports from China early in 2025 had surged to beat Mr Trump’s tariffs, but dropped steeply in June, Commerce Department data showed last week.

The US trade deficit with China tumbled by roughly a third in June to US$9.5 billion (S$12.2 billion), its narrowest since February 2004.

Over five consecutive months of declines, the US trade gap with China has narrowed by US$22.2 billion – a 70 per cent reduction from a year earlier.

Washington has also been pressing Beijing to stop buying Russian oil, with Mr Trump threatening to impose secondary tariffs on China. REUTERS