On August 11, 2025, just hours before a scheduled tariff escalation, President Donald Trump signed an executive order delaying the planned surge in U.S. duties—potentially up to 145%—on Chinese goods. This move extends the current pause for another 90 days, holding U.S. tariffs on Chinese imports at 30% and China’s reciprocal tariffs at 10%, instead of triggering what many analysts feared could have been a near-total trade freeze.
Chinese officials quickly confirmed a matching suspension of retaliatory measures. According to Beijing’s Commerce Ministry, the decision was made to “preserve stability in the global trading system” and allow more room for diplomatic negotiations. In a symbolic gesture, China also announced temporary easing of non-tariff barriers on certain U.S. agricultural and technology products.
Negotiations have been ongoing in Stockholm and Geneva, focusing on agricultural imports, technology transfer rules, and dispute resolution mechanisms. While both governments have signaled optimism, sources close to the talks stress that no binding agreement has yet been reached. A potential meeting between Trump and President Xi Jinping is being tentatively discussed for later this year.
Market Relief and Lingering Vulnerabilities
Financial markets responded immediately. In Asia, the Nikkei 225 jumped more than 2%, the Topix hit a two-year high, and Australia’s ASX 200 rebounded following an interest rate cut by the Reserve Bank of Australia. European markets posted moderate gains, while U.S. futures pointed higher on expectations that reduced trade tensions could soften inflationary pressures and increase the likelihood of a Federal Reserve rate cut.
July trade data from China showed 7.2% year-on-year growth in exports and the fastest rise in imports in nearly a year. Economists partly attribute this to the existing truce, which has kept major shipping lanes active and ensured a steady flow of goods between the two economies. U.S. exporters—especially soybean, pork, and machinery producers—welcomed the news, as many had feared losing access to one of their most important markets.
Still, beneath the relief lies ongoing risk. The extension does not resolve disputes over intellectual property rights, industrial subsidies, and the regulation of chemicals linked to fentanyl production. These are core sticking points that have derailed previous trade negotiations. Average U.S. tariffs remain at 18.6%, the highest since 1933, and are impacting consumer prices. While falling energy costs have helped ease headline inflation, core inflation remains above the Federal Reserve’s 2% target.
Diplomatic Maneuvers and What Lies Ahead
The 90-day extension is seen by many analysts as a tactical pause rather than a breakthrough. The Trump administration is reportedly seeking Chinese commitments to significantly increase purchases of U.S. agricultural products, including soybeans and corn, and to allow greater market access for American technology firms.
China, in turn, has been pressing for reduced export controls on semiconductors and rare-earth minerals, areas where U.S. restrictions have hit its manufacturing sector. At the same time, Washington is closely monitoring Beijing’s expanding energy relationship with Russia, raising concerns about sanctions compliance.
Legal uncertainties also surround Trump’s tariff policies. Several measures, particularly those introduced under the so-called “Liberation Day” emergency powers, are being challenged in federal courts. Early rulings have questioned the scope of executive authority in imposing such broad trade restrictions, and appeals are pending.
While business groups have welcomed the pause, they are urging both governments to use the time to address deeper economic rifts. Without progress, experts warn, the next deadline could reignite tensions and disrupt global supply chains once again. As one trade policy analyst put it, “This is a ceasefire, not a peace treaty.”