Tariff Hikes Put on Hold
On August 12, 2025, the United States and China agreed to extend their existing tariff truce for an additional 90 days, delaying steep tariff increases that threatened to escalate into a full-blown trade war. The extension maintains current U.S. tariffs on Chinese goods at 30%, while China’s retaliatory tariffs on U.S. products remain at 10%. Higher rates—previously set to soar to around 145% and 125%, respectively—are now postponed until November 10.
Markets Breathe Easier
The extension of the truce produced a wave of relief across global markets:
- Oil prices rose modestly, reflecting optimism about trade stability.
- European stock markets saw steady gains, led by positive investor sentiment.
- Asian equities rallied, with Japan’s Nikkei and Australia’s ASX 200 hitting new highs.
- U.S. indices, including the S&P 500 and Nasdaq, also moved higher, buoyed by softer inflation data.
Why the Truce Matters
The pause provides both sides with critical breathing room to negotiate without the immediate threat of disruptive duties. It protects U.S. retailers needing to stock seasonal inventory and signals a willingness—albeit cautious—to find common ground on enduring disputes such as intellectual property, subsidies, and market access. Analysts anticipate that the extension could pave the way for a future high-level meeting between Presidents Trump and Xi Jinping.
What Comes Next?
Despite the truce, the underlying tensions persist:
- Trump has reiterated demands such as increased Chinese purchases of U.S. soybeans.
- Negotiations remain complex, as both sides juggle domestic economic concerns and strategic competition.
- Treasury Secretary Scott Bessent and other officials continue to caution against complacency, emphasizing that the pause is temporary.
