On Monday, the U.S. and China agreed to extend their temporary tariff ceasefire for another 90 days, which is important as U.S. retailers gear up to boost inventories for the holiday shopping season.
President Trump took to his social media platform to share that he signed an executive order to pause the implementation of increased tariffs until 12:01 AM EST on November 10th.
In a similar move, China’s Commerce Department announced on Tuesday that it would also hold off on additional surcharges for U.S. companies on a restriction list, pushing back those measures for 90 days.
Trump’s order mentioned that the U.S. is still engaged in talks with China to address economic ties and ongoing trade concerns, particularly regarding domestic security issues.
The order highlighted that China is making strides to amend trade practices and address U.S. worries about economic and national security.
The tariff truce had been set to end at 12:01 AM EDT on Tuesday, but this extension will help facilitate a smoother period leading into the busy autumn and holiday seasons at lower tariff rates for items like electronics, clothing, and toys.
Without the extension, tariffs on Chinese products could have spiked to 145%, while U.S. tariffs on Chinese goods could rise to 125%. Currently, there’s a 30% tariff on Chinese imports versus a 10% tariff on U.S. exports to China.
Trump commented during a press conference on Monday that he feels optimistic about his relationship with Xi Jinping and is curious about the next steps.
China described the extended ceasefire as a way to implement a key agreement made during a previous call between the two leaders, aimed at stabilizing the global economy.
Last week, Trump indicated to CNBC that both countries might be close to reaching a trade deal, expressing hopes for a meeting with Xi by year’s end if possible.
Wendy Cutler, a former senior U.S. trade official, viewed this as positive, suggesting that both sides are genuinely exploring a deal that could set the stage for a meeting later this fall.
The trade “Détente” continued
The two nations initially agreed on a 90-day pause in May during discussions in Geneva, which allowed further negotiations to take place. After further meetings in Stockholm, there was an expectation that an extension could be on the horizon.
U.S. Treasury Secretary Scott Bescent has stated that the reciprocal tariff measures from earlier in the year were essentially tantamount to a trade embargo between the world’s two largest economies.
As for the negotiations, Kelly Anne Shaw, who served in a trade role during Trump’s first term, suggested that future talks would likely differ from past negotiations, implying Trump may have been looking for more concessions first.
Trump recently called for increased soybean purchases from China, though some analysts question the practicality of this request. Interestingly, he didn’t reiterate that demand in his latest statements.
Shaw noted that the original 90-day suspension was meant to pave the way for broader negotiations, with various issues surfacing over the weekend that needed addressing.
Ryan Majels, a former U.S. trade officer, remarked that this extension may help alleviate concerns on both sides as discussions continue toward a potential deal framework in the fall.
Earlier this year, imports from China increased despite tariffs but saw a notable decline in June, according to the Commerce Department. The U.S. trade deficit with China also shrank to $9.5 billion in June, marking a significant decrease—the lowest since February 2004. Over the past five months, the trade gap has decreased by $22.2 billion, cutting almost 70% compared to last year.
The U.S. has further urged China to halt oil purchases from Russia and apply pressure on Moscow regarding the war in Ukraine, with Trump warning of potential secondary tariffs on China if these actions do not change.
