No upper hand for US? Why Donald Trump has extended tariff truce with China for another 90 days – explained
US President Trump has extended the trade ceasefire with China by an additional 90 days, temporarily averting a potential economic confrontation between the world’s largest economies. Trump said he has been “dealing very nicely with China” as Beijing said it was seeking positive outcomes.Through his Truth Social platform, Trump confirmed signing the executive order for the extension, maintaining that “all other elements of the Agreement will remain the same.” Simultaneously, China’s Ministry of Commerce announced their matching extension of the tariff suspension.The previous arrangement was due to lapse at 12:01 am Tuesday. Without this extension, the United States could have increased taxes on Chinese imports beyond the existing 30%, potentially triggering Beijing to elevate retaliatory duties on American exports to China.This extended pause provides additional time for both nations to resolve their differences, possibly setting the stage for a meeting between Trump and Chinese President Xi Jinping later this year. American businesses engaged in Chinese trade have responded positively to this development.Also Read | ‘China issue more complicated…’: After tariff on India, will Donald Trump impose additional duties on China for Russia oil trade? What JD Vance saidThe US-China Business Council’s president, Sean Stein, emphasised that the extension is “critical” for allowing both governments to negotiate a trade agreement. American businesses anticipate this will enhance their access to Chinese markets and provide the stability needed for medium and long-term planning.“Securing an agreement on fentanyl that leads to a reduction in US tariffs and a rollback of China’s retaliatory measures is acutely needed to restart US agriculture and energy exports,” Stein was quoted as saying by the Associated Press.
What Trump’s executive order on China said
“The United States continues to have discussions with the PRC (People’s Republic of China) to address the lack of trade reciprocity in our economic relationship and our resulting national and economic security concerns,” said the executive order.“Through these discussions, the PRC continues to take significant steps toward remedying non-reciprocal trade arrangements and addressing the concerns of the United States relating to economic and national security matters,” Trump’s order said.“Based on this additional information and recommendations from various senior officials, among other things, I have determined that it is necessary and appropriate to continue the suspension effectuated by Executive Order 14298 until 12:01 a.m. eastern standard time on November 10, 2025,” the order added.
Why Trump is extending the rope to China
Beyond the language of the executive order passed by Trump, experts believe Trump has not been able to effectively influence China with his trade war tactics. Trump’s unfinished agenda includes securing a trade agreement with China, following his significant disruption of global trade through the implementation of substantial tariffs on nearly all nations.Trading partners, including the European Union and Japan, have conceded to asymmetrical trade agreements with Trump, accepting unprecedented US tariff rates (such as 15% on Japanese and EU imports) to avoid more severe consequences.Also Read | ‘US has gone rogue on trade…’: Jefferies’ Chris Wood calls Donald Trump’s 50% tariff on India a ‘xenophobic autarky’; slams ‘beggar thy neighbour’ policyThe United States has transformed from a predominantly open economy to one characterised by protectionist measures under Trump’s trade policies. According to the Budget Lab at Yale University, the average US tariff has increased substantially from approximately 2.5% at the year’s beginning to 18.6%, marking the highest level since 1933.So why is Trump being somewhat lenient in his policies with China? Experts feel the answer lies in critical minerals.China has challenged the effectiveness of US trade policies that relied on tariffs as leverage for negotiations. Beijing wielded significant influence through its control over rare earth minerals and magnets, which are essential components in various industries from automotive to aerospace, according to the AP report.The US has agreed to reduce restrictions on exports of computer chip technology and ethane for petrochemical production, whilst China committed to improving US companies’ access to rare earth materials.“The US has realised it does not have the upper hand,” Claire Reade, senior counsel at Arnold & Porter and former assistant US trade representative for China affairs was quoted as saying in the AP report.In May, the US and China avoided an economic crisis by lowering substantial mutual tariffs, which had previously escalated to 145% against China and 125% against the US.Also Read | Donald Trump tariffs: How much will India’s fuel bill rise if it stops Russian crude oil imports & where would it buy from? ExplainedThe substantial tariff rates nearly halted commerce between China and the United States, triggering a concerning downturn in global stock markets. During discussions in Geneva in May, both nations agreed to reduce their rates, with the US lowering to 30% and China decreasing to 10%, whilst continuing negotiations.Since demonstrating their mutual capacity to inflict economic damage, both nations have maintained diplomatic dialogue.“By overestimating the ability of steep tariffs to induce economic concessions from China, the Trump administration has not only underscored the limits of unilateral US leverage, but also given Beijing grounds for believing that it can indefinitely enjoy the upper hand in subsequent talks with Washington by threatening to curtail rare earth exports,” said Ali Wyne, a specialist in US-China relations at the International Crisis Group. “The administration’s desire for a trade detente stems from the self-inflicted consequences of its earlier hubris.”
US-China trade deal: What’s the road ahead?
Experts feel that the prospects of a comprehensive agreement between Washington and Beijing addressing major US concerns remain uncertain. These concerns include China’s inadequate intellectual property protection and their government’s support policies, which US officials argue provide Chinese companies unfair competitive advantages globally and have led to a substantial US-China trade deficit of $262 billion in the previous year.Also Read | India-US trade deal: With Donald Trump’s 50% tariffs looming, India reviews market access offers for US; three-pronged strategy to protect exportersLimited agreements appear more feasible, according to Reade, such as Chinese commitments to increase American soybean purchases and enhance controls on fentanyl-related chemical exports, whilst maintaining the supply of rare-earth magnets.However, Jeff Moon, who previously served as a US diplomat and trade official and currently heads China Moon Strategies consultancy, suggests that more complex issues will persist, noting that “the trade war will continue grinding ahead for years into the future.”
