US and China Postpone Tariff Deadline to November

The United States and China have agreed to extend their trade truce for an additional 90 days, avoiding a possible increase in tariffs that was set to take effect.

US President Donald Trump signed an executive order on Monday to maintain the agreement reached in May, when both sides decided to temporarily suspend certain tariffs on each other’s goods.

The extension prevents the imposition of higher tariffs on Tuesday, as previously threatened unless the truce was extended.

Recent negotiations have been described as “constructive” by both sides. China’s chief negotiator expressed a commitment to preserving the truce, while US officials awaited final approval from Trump.

A potential return to higher tariffs could have led to further trade disruptions and economic uncertainty amid concerns about the impact of tariffs on prices and the economy.

Trade tensions escalated in April when Trump announced extensive new tariffs, with China facing some of the highest rates. China responded with its own tariffs, leading to a series of retaliatory measures and a significant increase in tariffs.

In May, both sides agreed to suspend some tariffs. As a result, Chinese goods entering the US faced an additional 30% tariff compared to the start of the year, while US goods faced a new 10% tariff in China.

Ongoing discussions between the two countries include issues such as access to China’s rare earths, its imports of Russian oil, and restrictions on the sale of advanced technology, including chips to China.

Trump recently relaxed some export restrictions, allowing certain chip sales to Chinese companies in exchange for revenue sharing with the US government. The US also wants Chinese-owned TikTok to separate from its parent company, a demand that has been met with opposition from Beijing.

Despite the truce, trade between the two countries has still been affected. US government data shows that imports of Chinese goods in June 2024 were nearly halved compared to the previous year. In the first six months of the year, the US imported $165bn worth of goods from China, down approximately 15% from the same period last year, and American exports to China decreased by roughly 20%.