Washington – The United States and China have once again stepped back from a significant escalation in their ongoing trade war, agreeing to a 90-day extension of their current tariff truce. The move, confirmed on August 12, 2025, postpones a planned surge in U.S. duties on Chinese goods and provides a crucial window for further negotiations between the world's two largest economies.

President Donald Trump signed an executive order to formalize the extension, suspending a planned tariff hike on Chinese imports from the current 30% to a drastic 145%. The new deadline for the tariffs to take effect is now November 10. This is the second such 90-day extension, signaling a mutual, if cautious, desire from both nations to maintain economic stability and avoid a re-escalation that could disrupt global markets, particularly ahead of the holiday shopping season.

In response to the U.S. action, Beijing has committed to maintaining or removing certain non-tariff measures. The extension is designed to facilitate continued high-level discussions, following previous talks in Geneva and Stockholm, aimed at resolving deep-seated trade imbalances and addressing U.S. concerns about national and economic security.

This temporary peace has been welcomed by U.S. businesses, many of which rely on stability and access to the Chinese market. However, analysts warn that the fundamental issues at the heart of the trade conflict remain unresolved. Key sticking points include disagreements over intellectual property rights, Chinese industrial subsidies, export controls, and China’s role in the production of fentanyl.

While the extension provides breathing room, some U.S. objectives remain on the negotiating table. Despite President Trump's recent push for China to significantly increase its purchases of U.S. soybeans, no such formal agreement was included in the executive order. The talks continue to focus on implementing what the U.S. administration calls "reciprocal" tariffs.

The backdrop to this decision is a complex economic picture. China, the third-largest trading partner of the U.S., has seen its export growth continue, defying many predictions of a sharp decline due to the trade conflict. At the same time, U.S. officials have acknowledged that the previously planned triple-digit tariffs were likely economically unsustainable.

Financial markets responded with slight relief to the news. Investor focus is now shifting to the upcoming U.S. July Consumer Price Index (CPI) report. Markets anticipate the report, which could reflect modest inflation in tariff-sensitive goods, will heavily influence any decision by the Federal Reserve regarding a potential interest rate cut.

While the truce offers a temporary reprieve from escalating economic anxiety, experts predict the broader trade conflict is far from over. The extension keeps dialogue alive, but the path to a comprehensive, long-term resolution remains fraught with challenges, posing a persistent risk to global economic stability.