President Donald Trump on Monday announced an extension of the China trade tariff truce for another 90 days, which will create an opportunity for further negotiations between the two of the world’s largest economies.
Senior administration sources hinted for weeks that the extension was a certainty after both countries had settled on a tariff level above 100 percent on each other’s goods for the duration of late April and early May. The update suggests that the new cutoff for significant tariff increases will now be November 10.
“I have just signed an Executive Order that will extend the Tariff Suspension on China for another 90 days. All other elements of the Agreement will remain the same. Thank you for your attention to this matter! DONALD J. TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA,” posted Trump on Truth Social.
In other news, China has announced a further extension of its pause for tariff applications on the U.S.
The administration has demonstrated a clear intent to incorporate non-tariff trade-related disputes into the negotiations. Trump, for example, had to defend a point of a deal he made with chip manufacturers Nvidia and AMD, which allows them to continue the sale of some of their chips to the Chinese military on certain terms, and pay a part of the revenue to the US Government.
Last week, Trump did not proceed with his claimed policy of levying a secondary tariff of up to 100 percent on China for its ongoing purchase of Russian oil. However, he did punish India with a 50 percent tariff.
“We are hopeful that the United States will continue to engage with China to honor the important consensus that was reached during the two heads of state’s phone conversation, fully leverage the China-U.S. economic and trade consultation mechanism and, on the principles of equality, mutual respect and reciprocity, enhance comprehensiveness, reduce misperceptions and strengthen collaboration,” as said by Liu Pengyu, a spokesperson for the Chinese embassy.
The two countries’ most senior officials met in Stockholm a few weeks ago. This was the third installment of the Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer’s meetings with the Chinese officials in a negotiation led by Vice Premier He Lifeng.
The White House provided additional context for these statements, saying, “This action is necessary to facilitate ongoing and productive discussion with China about remedying trade imbalances, unfair trade policies, making market access available for American exports, and alignment with the United States on national security and economic interests.”
As for the negotiations that happened in Geneva in May and London in June, they were to refine the trade balance and alleviate the blockade on the essential mineral exports to the U.S., alongside the removal of the sales restrictions of ethane by China to U.S. manufacturers.
The U.S. promised to lower the tariff to 30% and China has promised to cut its tariff from 125% to 10%. Hence, in these negotiations, both countries have benefited.
Trump’s policies have led to significant trade tensions for a better part of the year now. He has been reviewing various Chinese policies, which in turn have been straining businesses relying on Chinese imports, and subsequently, the toy and apparel industry.
Trump’s 90-day tariff grace period for holiday inventory will boost sales, as demand will certainly outweigh supply. The U.S.-China Business Council was glad to witness that the 90-day period will be in effect and therefore, will have to ease spending.
“Stein remarked, “The extension is crucial in allowing both sides of the government to come to negotiate a deal that enhances access to the US market in China, resolves US-China trade differences, and gives the required certainty for businesses to plan in the mid-to long-term.”
Moon Jeff, who previously held the position of USTR for China, argues that Trump is trying to reach an agreement with China that would be ready before the regional summit in South Korea towards the end of October.
Moon elaborated on the region’s recent collaborative sentiments, explaining the recent series of rapprochements as, ‘confidence-building measures that are intended to improve relations.” source
