The United States and China have agreed to extend their tariff truce for an additional 90 days, a move that provides a temporary reprieve for global markets amidst ongoing trade negotiations. President Donald Trump signed an executive order on August 12, 2025, extending the halt on increased tariffs. This decision maintains the current tariff rates of 30% on U.S. goods entering China and 10% on Chinese goods entering the U.S., aiming to de-escalate trade tensions and allow more time for discussions between the two economic powerhouses.
The extension follows recent productive trade talks in Stockholm between U.S. Treasury Secretary Scott Bessent and China's Vice Premier He Lifeng, continuing a series of discussions that have also included meetings in Geneva and London. These negotiations are focused on addressing trade imbalances and unfair practices. The truce, initially established in May, was set to expire on August 12. Asian stock markets reacted positively to the news, with Japan's Nikkei 225 Index reaching an all-time high of 42,613.63 points on August 8, 2025. This optimism is further supported by expectations of U.S. Federal Reserve rate cuts, with markets pricing in a high probability of a cut in September, influenced by July inflation data showing a steady 2.7% annual increase.
Despite the 90-day extension offering temporary stability, significant underlying issues such as market access, intellectual property protection, and industrial subsidies remain unresolved. These persistent trade conflicts are expected to continue influencing global economic dynamics. While the truce provides a strategic pause, analysts caution that it does not represent a definitive resolution, and renewed friction is possible as negotiations progress toward a more comprehensive agreement. The complexity of these issues, with historical parallels to past trade disputes, suggests that these negotiations may be long-term.