United States President Donald Trump signed an executive order on August 11, 2025, extending the trade truce with China by an additional 90 days. This decisive action averted an immediate surge in tariffs that had threatened to raise U.S. duties on Chinese goods to 145% and Chinese duties on American products to 125%, a level that would have severely restricted bilateral trade.
The current truce maintains U.S. tariffs at 30% on a range of Chinese imports, including those related to fentanyl, while China's import tariffs remain at 10% for U.S. goods. These rates represent a reduction from previously threatened higher levels, stemming from negotiations that took place in Geneva in May 2025 and continued in Stockholm in July 2025. While these discussions did not culminate in a definitive agreement for an extension beyond the original deadline, Treasury Secretary Scott Bessent expressed a degree of optimism regarding the progress in talks with China, suggesting that the extension offers a vital window for more comprehensive economic negotiations. These broader discussions are anticipated to encompass critical issues such as export controls and industrial capacity.
The decision to prolong the truce was widely expected, as the administration had shown a reluctance to further inflame the trade conflict, which had already introduced volatility into global markets. Although the truce offers a reprieve from immediate tariff hikes, the United States continues to impose 30% tariffs on Chinese goods above pre-existing levels. Economists have voiced concerns that these existing tariffs could exert upward pressure on inflation and potentially dampen economic growth. President Trump also indicated a willingness to engage in a meeting with Chinese President Xi Jinping before the end of the year, contingent upon the achievement of a trade agreement. He noted that such a meeting would only occur if a satisfactory accord is reached. Negotiations are ongoing, with August 12, 2025, having been the original expiration date for the truce.
These developments underscore the intricate nature of U.S.-China trade relations, with the issue of fentanyl playing a significant role in the ongoing discussions. The synthetic opioid has been a major point of concern for the United States, given its central role in the ongoing opioid crisis. The U.S. government has persistently urged China to implement more stringent measures against fentanyl trafficking. China has conveyed its readiness to cooperate on this front, while also cautioning that the imposition of further tariffs could impede collaborative efforts. The extension of the truce provides a more stable environment for these critical discussions to continue, aiming to resolve outstanding trade issues and prevent a resurgence of tariff escalations. The impact of these tariffs on inflation and economic growth remains a key consideration, with economists noting that sustained tariffs can lead to higher consumer prices and slower economic expansion, as seen in past trade disputes where tariffs contributed to inflationary pressures and reduced economic output.