Summary
- US President Donald Trump extends US-China trade truce for another 90 days, averting immediate tariff escalation.
- Extension welcomed by businesses as it buys time for negotiations on market access, tariffs, and rare earths.
- Both nations signal willingness to resolve disputes, but core issues like Russian oil trade and technology remain contentious.
Trump Extends US-China Trade Truce: Extension Announcement and Market Impact
When President Donald Trump extends US-China trade truce for a further 90 days, the decision sends ripples through financial markets, global supply chains, and the corridors of multinational corporations. Announced late on August 11, 2025, the executive order postpones what could have been a damaging tariff escalation between the world’s two largest economies. The deadline for the current agreement was set to expire just after midnight, with the prospect of US tariffs on Chinese imports rising from 30% to potentially even higher levels. In return, Beijing had been preparing retaliatory levies targeting American agricultural and industrial exports.
By granting the extension, the White House temporarily halts a cycle of tit-for-tat tariffs that has strained bilateral ties for years. For many US businesses with exposure to the Chinese market, this pause provides a much-needed breathing space to reassess operations, supply chain strategies, and pricing models. It also leaves the door open for a potential summit between Trump and Chinese President Xi Jinping later in the year—a meeting that could redefine the trajectory of US-China trade relations.
For all the PANICANS ! Calm down ! Trump just extended China Tarrifs another 90 days ! RELAX PEOPLE pic.twitter.com/yDe1xROW2L
— April Silverman (@CaliMAGABarbie) August 12, 2025
Business Sector Reactions and Economic Relevance
The announcement that Trump extends US-China trade truce came via his Truth Social platform, where he confirmed that “all other elements of the Agreement will remain the same.”
US officials framed the move as a calculated step to keep economic channels open while hard issues are negotiated. For American exporters, particularly in agriculture and energy, the truce signals hope for tariff rollbacks that could revitalise sectors hit hard by the earlier trade war. Sean Stein, president of the US-China Business Council, described the extension as “critical” for businesses to make medium- and long-term plans. He specifically pointed to the urgency of resolving disputes around fentanyl production and rare earths access—two areas directly tied to US industrial competitiveness.
Official trade data from the US Census Bureau shows that China accounted for 8.5% of total US exports in 2024, down from 19% in 2018 before the trade conflict intensified. Similarly, US imports from China have declined by nearly 30% over the same period, reflecting both tariff impacts and supply chain diversification. The latest extension aims to stabilise this trend and prevent further decoupling.
Geopolitical and Economic Pressures on Both Sides
Trump extends US-China trade truce at a moment when both countries face internal economic pressures. China’s economy has slowed significantly, with its National Bureau of Statistics reporting GDP growth of 3.9% in the first half of 2025, well below the pre-pandemic average. US economic growth, while more robust at 2.1% for Q2 2025 according to the Bureau of Economic Analysis, has shown signs of strain due to reduced exports and higher import costs.
The June 2025 agreement between the two nations offered a partial thaw: Washington agreed to ease export restrictions on chip technology and ethane, while Beijing promised improved access to rare earths for US firms. Rare earths are vital for the production of electric vehicles, advanced electronics, and military equipment. According to the US Geological Survey, China controls over 60% of the world’s rare earths production and 85% of processing capacity—a strategic advantage that the US cannot ignore.
Extending the truce buys time for these arrangements to take root. However, lingering disputes remain over Beijing’s purchase of Russian oil, an issue that Trump’s administration has linked to potential future tariffs.
Expert Opinions and Strategic Limitations
While Trump extends US-China trade truce, critics argue that the move may only postpone an inevitable clash. Trade policy experts caution against overestimating the durability of temporary pauses.
The Trump administration has transformed US trade policy into a tool for political bargaining. The Budget Lab at Yale University notes that the average US tariff rate has risen to 18.6% in 2025, the highest since 1933. This protectionist shift has been embraced by certain domestic industries but criticised by free trade advocates and economists, who warn of long-term inefficiencies and inflationary pressures.
Some analysts view the extension as a strategic retreat rather than a victory. Claire Reade, former US trade representative for China affairs, noted that “the US has realised it does not have the upper hand.” China’s capacity to disrupt supply chains through rare earths export controls, coupled with its massive consumer market, gives it bargaining power that even aggressive US tariffs cannot easily overcome.
Moreover, the history of US-China trade negotiations under Trump’s presidency shows a pattern: short-term truces followed by renewed confrontations. If the deeper issues—technology transfer, state subsidies, and geopolitical alignments—are not addressed, the truce may simply be a prelude to another escalation.
Potential Pathways for a Long-Term Deal
If Trump extends US-China trade truce into 2026, it could mark a pivot toward more predictable bilateral engagement. Failure to achieve a lasting agreement risks reigniting tariff battles with global repercussions.
Looking ahead, the prospects for a comprehensive US-China trade deal depend on political will on both sides. The possibility of a Trump-Xi summit later this year offers a symbolic opportunity, but substantive breakthroughs will require concessions in sensitive areas like intellectual property, digital trade rules, and energy imports.
The International Monetary Fund has warned that a collapse in US-China trade could shave nearly 0.8% off global GDP growth over two years, driven by disruptions in manufacturing and commodity flows. Conversely, a durable agreement could stimulate investment and re-anchor supply chains in ways that benefit both economies.
The US agricultural sector, in particular, stands to gain from expanded Chinese purchases of soybeans, corn, and pork. According to the US Department of Agriculture, China was the top destination for US agricultural exports in 2020 and 2021, but shipments have since fallen sharply.
Editorial Perspective on the Truce
The announcement that Trump extends US-China trade truce for 90 days offers a temporary reprieve in a long-running and complex economic rivalry. For businesses, it means breathing space; for policymakers, it’s a chance to push negotiations toward a more balanced agreement. Yet the structural tensions—spanning technology, energy, and strategic influence—remain unresolved.
In many ways, this extension is less a conclusion than an intermission. The ultimate test will be whether both nations can move from temporary pacts to lasting frameworks that stabilise one of the world’s most consequential economic relationships. Until then, every time Trump extends US-China trade truce, it will be seen as both a diplomatic pause and a reminder of how fragile the current peace truly is.
