US & China agree to extend tariff truce for another 90 days

The U.S. and China on Monday (Aug. 11) extended their tariff truce for another 90 days, just hours before the truce was set to expire on Tuesday.

Both countries confirmed the extension in a joint statement, as reported by Chinese media Xinhua.

U.S. President Donald Trump shared on his Truth Social account that he had signed an executive order that will suspend the imposition of higher tariffs until Nov. 10.

All other elements of the agreement will remain the same, according to Trump.

"The United States entered into discussions with the PRC (People's Republic of China) to address the lack of trade reciprocity in our economic relationship and our resulting national and economic security concerns," Trump's executive order stated.

"Through these discussions, the PRC continues to take significant steps toward remedying non-reciprocal trade arrangements and addressing the concerns of the United States relating to economic and national security matters."

The extension of the trade truce will prevent U.S. tariffs on Chinese goods from surging to 145 per cent, and Chinese tariffs on U.S. goods from shooting up to 125 per cent.

Tariff war

The tariff war between China and the U.S. has been brewing for some time.

Trump's much-touted “Liberation Day” on Apr. 2 saw the imposition of widespread tariffs, one of the highest being a 34 per cent tariff on China.

Trump later slaps a cumulative tariff on Chinese goods to 145 per cent, while China retaliated by imposing a 125 per cent tariff on U.S. imports.

Both countries agreed on a 90-day suspension to pause most of their tariffs in May, after negotiators met for the first time in Geneva.

The truce sees a 30 per cent tariff on Chinese imports and a 10 per cent tariff on U.S. imports.

In June, the U.S. and China agreed in principle on a framework to ease trade tensions after two days of negotiations in London.

Trump told CNBC  last week that the U.S. and China were "getting very close to a [trade] deal" and he would be having a meeting with Chinese President Xi Jinping before the end of the year if a deal was struck.

"If we don't make a deal, I'm not going to have a meeting... what's the purpose of meeting if we're not going to make a deal?" Trump said.

Top image Evgenia Novozhenina, Saul Loeb/AFP