The United States and China have agreed to extend their 90-day trade truce, a move that temporarily de-escalates tensions between the world's two largest economies. This extension, effective August 12, 2025, pushes the deadline for potential tariff hikes to November 10, 2025, providing a crucial window for continued negotiations on a range of complex issues.
The trade dispute, which saw tariffs escalate significantly, had strained bilateral relations. The current truce aims to address critical matters including the trafficking of fentanyl, significant trade imbalances, and the revitalization of American manufacturing. The agreement to pause further tariff escalations was first established in May 2025, following intense negotiations and a period of escalating retaliatory measures. Key to the ongoing dialogue are specific economic strategies, such as U.S. President Donald Trump's discussions involving chipmakers like Nvidia and AMD potentially allocating a portion of their China sales revenue to the U.S. government. President Trump also encouraged China to increase its soybean imports from the U.S. to help reduce the trade deficit.
The U.S.-China Business Council has welcomed the extension, with President Sean Stein stating that the truce is "critical to give the two governments time to negotiate an agreement that improves US market access in China, addresses the bilateral trade imbalance, and provides the certainty needed for companies to make medium- and long-term plans." The council also highlighted the need for an agreement on fentanyl to facilitate the reduction of U.S. tariffs and the rollback of China's retaliatory measures, which would be vital for restarting U.S. agriculture and energy exports.
While the extended truce offers a period of relief, the underlying economic and strategic challenges remain. Experts suggest that while limited agreements on issues like soybean purchases and fentanyl control may be reached, the broader trade war is likely to persist. J.P. Morgan estimates that tariffs could push U.S. PCE inflation to 3.1% in 2025, with global GDP growth potentially slowing. The tech sector, in particular, faces volatility due to export controls and tariffs reshaping supply chains.