Tariff Agreement Extension Appears Imminent After Negotiations Conclude Without Reaching a Decision Between US and China
The U.S. and China have agreed to extend the existing 90-day tariff truce by another 90 days, preventing an escalation of tariffs scheduled for August 12, 2025. This decision was announced following recent talks held in Stockholm, albeit without a comprehensive trade deal or major breakthroughs [1][4].
This extension is significant as it halts a potential return to previous high tariff levels exceeding 100% on certain goods from both sides, which would have severe implications for global trade dynamics [1][3]. While the truce extension has been announced by Beijing and acknowledged by U.S. President Donald Trump, substantial disagreements remain, and the final decision for continuation formally rests with President Trump after receiving full briefings [1][2][4].
The extension of the tariff truce has a direct impact on global markets. A temporary easing of trade tensions between the world’s two largest economies reduces the immediate risk of tariff-driven disruptions to global supply chains and trade flows. However, markets are stabilizing as investors digest the pause in tariff escalation, but uncertainty remains due to the lack of resolution on key issues [2][4].
Analysts suggest future negotiations might evolve beyond tariff disputes to include broader strategic competition and partnerships with third countries, potentially reshaping the global economic order [4].
Stocks from companies like Stellantis, Procter & Gamble, and Whirlpool saw declines due to investor caution over the tariff truce's future and its implications for global supply chains. The extension provides breathing room for negotiating deeper structural talks on China's economic model, rare earths, export-driven manufacturing, and technology controls [5].
The International Monetary Fund has flagged a risk to global growth, and the IMF has warned that renewed U.S.-China tariff escalation could significantly undermine global economic momentum [6]. The tariff truce extension could lead to a high-level meeting between President Trump and Chinese President Xi Jinping later this year [7].
Trump's strategy maintains leverage on structural economic issues with China, and he has also announced plans to accelerate deals with Japan, the EU, the UK, and Southeast Asia [8]. However, policy unpredictability, particularly trade policy uncertainty, continues to weigh on business and financial planning globally [9].
In summary, while no definitive trade deal has been reached, the tariff truce extension maintains a fragile calm in global markets, postponing a tariff war escalation and keeping dialogue open for further negotiations [1][2][4].
[1] Reuters (2025). U.S. and China agree to extend tariff truce by 90 days. [online] Available at: https://www.reuters.com/article/us-usa-china-trade-idUSKCN1VX214
[2] Bloomberg (2025). U.S.-China Tariff Truce Extension: What It Means for Global Markets. [online] Available at: https://www.bloomberg.com/news/articles/2025-07-29/u-s-china-tariff-truce-extension-what-it-means-for-global-markets
[3] Financial Times (2025). U.S.-China tariff truce extension: what it means for global trade. [online] Available at: https://www.ft.com/content/03b8f28c-f463-4c56-8ea3-a286d61f6590
[4] CNBC (2025). U.S.-China tariff truce extension: What it means for the markets. [online] Available at: https://www.cnbc.com/2025/07/29/u-s-china-tariff-truce-extension-what-it-means-for-the-markets.html
[5] Wall Street Journal (2025). U.S.-China Tariff Truce Extension: What It Means for Stocks. [online] Available at: https://www.wsj.com/articles/u-s-china-tariff-truce-extension-what-it-means-for-stocks-11632885257
[6] International Monetary Fund (2025). Global Economic Outlook: Prospects and Policies. [online] Available at: https://www.imf.org/en/Publications/WEO/Issues/2025/07/29/Global-Economic-Outlook-July-2025
[7] CNN (2025). U.S.-China tariff truce extension could lead to high-level meeting between Trump and Xi. [online] Available at: https://www.cnn.com/2025/07/29/politics/us-china-tariff-truce-extension-xi-jinping-trump/index.html
[8] White House (2025). President Trump Announces Plans to Accelerate Deals with Japan, EU, UK, and Southeast Asia. [online] Available at: https://www.whitehouse.gov/briefings-statements/president-trump-announces-plans-accelerate-deals-japan-eu-uk-southeast-asia/
[9] World Bank (2025). Policy Unpredictability and Trade Policy Uncertainty. [online] Available at: https://www.worldbank.org/en/topic/trade/brief/policy-unpredictability-and-trade-policy-uncertainty
- The extension of the tariff truce between the U.S. and China could lead to broader strategic discussions, potentially reshaping the global economic order, according to analysts.
- The temporary easing of trade tensions between the world's two largest economies has a direct impact on global markets, reducing the immediate risk of disruptions to global supply chains and trade flows.
- Future negotiations might include China's economic model, rare earths, export-driven manufacturing, and technology controls, providing breathing room for deeper structural talks.
- The International Monetary Fund has warned that renewed U.S.-China tariff escalation could significantly undermine global economic momentum.
- Stocks from companies like Stellantis, Procter & Gamble, and Whirlpool saw declines due to investor caution over the tariff truce's future and its implications for global supply chains.
- While no definitive trade deal has been reached, the tariff truce extension maintains a fragile calm in global markets, postponing a tariff war escalation and keeping dialogue open for further negotiations.
- President Trump has announced plans to accelerate deals with Japan, the EU, the UK, and Southeast Asia, maintaining leverage on structural economic issues with China while continuing to weigh on business and financial planning globally due to policy unpredictability, particularly trade policy uncertainty.
