US-China Tariff Truce Extended 90 Days to Late November Averting Short-Term Market Volatility

The United States and China have extended their tariff truce by 90 days, delaying potential new tariffs on billions of dollars in goods traded since 2018. The extension, announced after high-level talks in Stockholm between U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, follows prior negotiations in Geneva and London. The pause, initially set to expire on August 12, now extends through late November, offering temporary relief to global markets and businesses caught in the crossfire of escalating trade tensions [1][2]. The agreement underscores both nations’ shared interest in avoiding immediate trade disruptions amid a broader global economic slowdown.

The extension has been welcomed by financial markets, with Asian and U.S. equities stabilizing in response. Investors had braced for renewed tariff escalations, which could have pressured export-dependent industries and disrupted multinational supply chains. While the truce averts short-term volatility, analysts caution it reflects a tactical pause rather than a resolution to deeper disputes. Core issues, including U.S. efforts to curb fentanyl production and China’s demands to remove tariffs on related chemicals, remain unresolved. Chinese officials have framed these tariffs as obstacles to collaborative efforts in combating drug trafficking, while the U.S. administration ties them to domestic policy priorities [3].

The timing of the agreement highlights the political and economic pressures shaping the negotiations. The U.S. faces an election year, complicating Biden administration efforts to enact sweeping trade reforms. Meanwhile, China’s slowing economy has increased its reliance on stable export markets. Despite these challenges, neither side has publicly confirmed the truce’s extension, with the White House remaining silent on the matter. This lack of transparency has fueled skepticism about the durability of the pause, as both parties appear to be managing trade tensions rather than addressing systemic grievances [2].

While the 90-day window provides a reprieve for businesses and markets, experts warn it may not suffice to resolve entrenched disagreements. The focus now shifts to whether negotiators can transition from crisis management to sustained cooperation. A successful resolution would require both sides to move beyond tactical concessions and address structural disputes, such as intellectual property protections and digital trade frameworks. Failure to do so could reignite tensions, forcing the world’s two largest economies into a cycle of retaliatory tariffs with far-reaching consequences for global trade. The outcomes of the Stockholm talks will be critical in determining whether this truce marks a step toward de-escalation or a temporary pause before renewed conflict.

Sources:

[1] [Reuters] [https://www.reuters.com/world/china/us-china-resume-tariff-talks-effort-extend-truce-2025-07-27/]

[2] [Fortune] [https://fortune.com/2025/07/27/us-china-trade-truce-extension-90-days-trump-tariffs/]

[3] [Mitrade] [https://www.mitrade.com/insights/news/live-news/article-3-990264-20250728]