The United States and China have agreed to extend a pause on increasing tariffs imposed on each other’s goods for another 90 days, following an executive order signed by President Donald Trump on Monday.
This agreement averts an immediate spike in tariffs that threatened to reignite a severe trade blockade between the world’s two largest economies.
According to CNBC’s initial report, this announcement came just hours before a midnight deadline (12:01 am ET) when tariffs on Chinese imports were set to jump from 30% to 54%, while China’s tariffs on American exports would rise from 10% to 34%.
China released a joint statement with the U.S. confirming the 90-day trade truce extension and committing to keep the 10% tariffs it currently imposes on American goods throughout the period.
The statement referenced ongoing bilateral talks held last month in Sweden.
This extension follows a series of “reciprocal” tariffs imposed by Trump on various trading partners globally, pushing the U.S.’s effective tariff rate to levels unseen since the Great Depression.
Increasing tariffs on Chinese goods, America’s second-largest source of imports — would have inevitably raised costs for many American businesses and consumers, who may already be feeling the impact of previous import tax hikes.
After the July meeting in Sweden, Chinese negotiators suggested that an agreement had been reached.
However, Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer, both present at the talks, clarified that nothing was finalized without President Trump’s approval.
“We’ll see what happens. They’ve been dealing quite nicely. The relationship is very good with President Xi and myself,” Trump said earlier on Monday.
A White House fact sheet regarding the extension described trade talks with China as “constructive” and quoted Trump stating, “We’re getting along with China very well.”
Following last month’s meeting with Chinese trade officials, Bessent expressed his warning to Chinese counterparts that continuing to buy Russian oil would trigger significant tariffs under congressional legislation allowing Trump to impose levies up to 500%.
It remains unclear whether the administration plans to escalate these threats.
United States President, Donald Trump, recently targeted India, which also imports Russian oil (though far less than China), warning that a 50% tariff could be imposed if it continues by month’s end.
The Indian government has criticized this move, claiming it is being unfairly singled out. Trump hinted that other countries might also face similar tariff threats. “You’re going to see a lot more. So this is a taste,” he said last week.
In a Fox News interview over the weekend, Vice President JD Vance indicated tariffs on China remain a possibility, although Trump had not made a final decision.
“Given that we seem to be headed toward some type of deal with China leading to some kind of meeting between Xi and Trump, the administration has definitely been more conciliatory towards China in the past few weeks,” noted Wendy Cutler, former U.S. trade negotiator and now vice president of the Asia Society Policy Institute.
If China complies with U.S. demands to reduce Russian oil purchases, it will likely do so “quietly and gradually” rather than with a public announcement from Trump, she added.
Still, several issues remain unresolved. Bessent voiced concerns about China’s sale of over $15 billion in dual-use technology (both commercial and military) to Russia and its importation of sanctioned Iranian oil.
Another area of contention is China’s export of rare earth magnets. Although China agreed to boost exports, Trump claims the country has not upheld this commitment.
The U.S. is also pushing for an American buyer for TikTok, owned by a Chinese company. Congress has set a deadline for new ownership, threatening a ban if it is not met.
Ahead of crucial inflation data scheduled for release on Tuesday, U.S. stocks closed lower on Monday.
This story has been updated to correct an earlier misstatement about the tariff rate the United States would have imposed on Chinese goods if the pause had not been extended.
