US-China Tariff Deal / Tariff exemption to China for 90 days, Trump calls Jinping a good friend

US-China Tariff Deal: US President Donald Trump on Monday, August 11, 2025 signed an executive order extending the moratorium on trade tariffs with China by another 90 days. The decision has averted a potentially dangerous confrontation between the world's two largest economies. "I have signed an executive order extending the tariff suspension on China for another 90 days. All other elements of the agreement remain the same," Trump wrote on his Truth social platform. The move is seen as a move to give more time to the ongoing trade talks between the two countries.

Trump and Xi: A new beginning?

Trump in his statement referred to his "very good" relationship with Chinese President Xi Jinping and said that "China is behaving very well." The statement indicates that a summit between the two leaders is likely later this year. Trade experts believe that this extension gives the two countries an opportunity to resolve their long-term trade differences and work towards a permanent agreement.

Relief from tariff crisis

Prior to this extension, the tariff suspension was set to expire at 12:01 a.m. on Tuesday (August 12, 2025). If this moratorium was not extended, the US could have raised tariffs on Chinese imports by up to 145%, while China could have imposed tariffs on US exports by up to 125% in retaliation. This could have almost brought the trade relationship between the two countries to a trade blockade.

Currently, US tariffs remain at 30% (including a 10% base rate and 20% fentanyl-related tariffs) on Chinese imports and Chinese tariffs remain at 10% on US exports. This 90-day extension will keep tariffs frozen until November 10, 2025, providing relief to supply chains during the crucial autumn import period for Christmas shopping.

Reaction of US companies and business council

Sean Stein, president of the US-China Business Council, described the extension as "important". He said, "It gives the two governments time to negotiate a trade agreement that will provide US companies with better market access in China and the certainty needed for medium-to-long term plans." In particular, the extension is important for US retailers who are preparing for the year-end holiday season.

What happened before?

Earlier, in talks held in Geneva in May 2025, the two countries had decided to reduce the heavy tariffs imposed on their products, which averted an economic catastrophe. At that time, US tariffs had reached 145% and Chinese tariffs 125%, which caused huge turmoil in global markets. After the Geneva agreement, the tariffs were reduced to 30% (US) and 10% (China).

Additional talks in London in June and Stockholm in July solidified the suspension. In June, the two sides reached agreements to ease tensions, with the US lifting export restrictions on computer chip technology and ethane used in petrochemical production and China promising to ease access to rare earth minerals.

What is the challenge?

While the extension provides short-term stability for supply chains and global markets, experts believe it is merely a temporary relief. The two countries are yet to reach agreement on deeper issues such as intellectual property protection, industrial subsidies, and market access. International Crisis Group expert William Yang warns that "China will continue to pressure the US by using its export power of rare earth minerals."

In addition, domestic political pressure due to the upcoming presidential election in the US could also pose a challenge for the Trump administration. Any major agreement with China could be seen as a sign of weakness, limiting Trump's strategy. On the other hand, US exporters, especially in the agriculture and technology sectors, are demanding tariff relief.

Future prospects

The 90-day extension gives the two countries a chance to work on a sustainable trade framework. Experts believe the suspension could be extended if upcoming negotiations—possibly with Trump and Xi meeting—lead to partial agreements. However, if negotiations stall or geopolitical tensions escalate, the deal could also come to an abrupt end.

Meanwhile, businesses are being advised to make their supply chains resilient and prepare for potential tariff hikes. The extension has certainly brought relief for the holiday season, but long-term uncertainty still remains.