Tariff escalation avoided ahead of potential leaders’ summit
President Donald Trump has extended the current trade truce with China for another 90 days, postponing a potential escalation in tariffs between the world’s two largest economies. The decision, confirmed by both Washington and Beijing, delays the expiration of the previous agreement, which was set for early Tuesday morning.
Without the extension, U.S. tariffs on Chinese imports could have risen above the existing 30%, prompting expected retaliatory measures from Beijing. Business groups, including the U.S.-China Business Council, have welcomed the move, calling it “critical” for providing time to negotiate improved market access and greater certainty for long-term investment plans.
Concessions and ongoing negotiations
China’s Ministry of Commerce announced it would temporarily lift certain restrictions on American companies, including those on its export control and unreliable entities lists. These measures had been introduced after the U.S. imposed initial tariffs in April. Meanwhile, both nations continue to negotiate on issues ranging from fentanyl controls to rare earth mineral access.
The 90-day extension could pave the way for a potential summit later this year between Trump and Chinese President Xi Jinping. However, analysts caution that the talks so far have produced only incremental agreements, such as commitments on agricultural purchases and easing specific export restrictions.
High tariffs and shifting leverage
Since the start of Trump’s tariff-driven trade policy, average U.S. import duties have climbed from roughly 2.5% to 18.6%, the highest level since 1933. Major trading partners like Japan and the European Union have accepted elevated tariffs to maintain access to the U.S. market. But with China, the strategy has faced pushback, including the threat of reduced access to critical rare earth materials.
Earlier this year, both sides agreed to roll back triple-digit tariffs that had disrupted trade and shaken global markets. Current rates stand at 30% for U.S. tariffs on Chinese goods and 10% for China’s tariffs on American products. The mutual climbdown underscored the economic risks each side faces in a prolonged standoff.
Long-term challenges remain
Key disputes remain unresolved, including intellectual property protection, Chinese industrial subsidies, and a U.S. trade deficit with China that reached $262 billion last year. Experts predict the “trade war” will likely persist in some form for years, with only limited interim deals likely to emerge.
While the extension offers short-term stability, it does little to address the structural issues at the heart of the conflict, leaving both economies in a prolonged state of negotiation and uncertainty.