The United States and China agreed to pause tariff hikes on each other’s goods for an additional 90 days, according to an executive order signed by President Donald Trump on Monday. Without the agreement, tariffs were set to immediately surge, risking a return to ultra-high levels that had formed an effective blockade on trade between the world’s two largest economies.
The news, first reported by CNBC, comes hours ahead of a 12:01 am ET deadline when tariffs on Chinese goods were set to rise to 54% from 30%, and Chinese tariffs on American exports would return to 34% from 10%.
In a joint statement with the US, China confirmed the 90-day trade truce extension and said it would maintain the 10% tariffs it has imposed on American goods during that period. The statement was based on the bilateral negotiations that took place in Sweden last month, it said. The extension comes after Trump imposed a slew of “reciprocal” tariffs on trading partners around the world, which have raised the United States’ effective tariff rate to levels not seen since the Great Depression.
Higher tariffs on Chinese goods, America’s second-largest source of imports, would have almost certainly raised the costs many American businesses and consumers could pay — or already are paying — because of increased import taxes Trump has enacted.
After meeting in Sweden in July, Chinese negotiators went as far as to say that a deal was reached. Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer, both of whom attended the meeting, disputed that, saying nothing was final without Trump’s word.
“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 on the extension said trade discussions with China have been “constructive” and quoted Trump saying: “We’re getting along with China very well.”
At the conclusion of last month’s meeting with Chinese trade officials, Bessent said he warned his Chinese counterparts that continuing to purchase Russian oil would bring about huge tariffs under legislation in Congress that allows Trump to impose levies up to 500%.
It’s not clear if the administration is prepared to double down on those threats yet. Trump recently threatened India, which also purchases Russian oil, albeit considerably less than China, with a 50% tariff rate if it continues to do so by the end of this month.
Source: Here
