Breaking News! The US-China trade truce has been extended for another 90 days! The tariff war is temporarily suspended
2025-08-12 09:06:42
In early Asian trading on Tuesday (August 12), Xinhua News Agency reported a major news story: China and the United States achieved positive progress in their trade talks in Stockholm, Sweden, with the two sides issuing a joint statement announcing a 90-day extension of the previously agreed tariff truce. This decision not only injects new momentum into easing trade tensions between the two countries but also lays the foundation for a possible "leaders' summit" between the two countries in the fall.
Ongoing dialogue from Geneva to Stockholm
As early as May 12, China and the United States reached a joint statement in Geneva, announcing the suspension of some high tariffs to buy time for further negotiations. Subsequently, the London talks on June 9-10 and the Stockholm talks on July 28-29 further consolidated this mechanism. During the Stockholm talks, Chinese Vice Premier He Lifeng held in-depth consultations with U.S. Treasury Secretary Scott Besant and U.S. Trade Representative Jamison Greer. Both sides reaffirmed the commitments made in the Geneva Joint Statement and reached agreement on specific measures.
The core content of the joint statement
According to the latest joint statement, the United States will amend the 24% ad valorem tariff imposed on Chinese goods (including those from Hong Kong and Macao) in Executive Order No. 14257 of April 2, 2025, suspending its implementation for 90 days starting August 12, while retaining the remaining 10% tariff. China has accordingly adjusted its Tax Commission Announcement No. 4 of 2025, also suspending the 24% tariff on US goods for 90 days, while retaining the 10% tariff. Furthermore, China has pledged to continue to suspend or remove non-tariff countermeasures against the United States in accordance with the Geneva Joint Declaration. This mutual concession demonstrates restraint and cooperation on both sides in the trade dispute.
The White House's latest moves
On August 11, Reuters reported that US President Trump signed an executive order extending the US-China tariff truce until mid-November. This move prevented a significant escalation of tariffs that had been scheduled to expire in the early hours of August 12. According to White House officials, this decision provides US retailers with valuable time to stock up for the year-end shopping season and avoids the cost surges caused by high tariffs.
Trump's statements and strategies
Before signing the executive order, Trump remained ambiguous at a press conference about whether to maintain the lower tariffs, but then quickly took action, demonstrating his flexible negotiating style. At the press conference, he expressed a good relationship with the Chinese president and said China had "behaved very well" recently. Trump also demanded on Sunday that China double its purchases of US soybeans, but it is unclear whether China will agree to this condition. Analysts believe this request may be a probing tactic by Trump in the negotiations, intended to gain more leverage in subsequent talks.
Avoid the consequences of a trade embargo
Without this truce extension, US tariffs on Chinese goods would have soared to 145%, while China's tariffs on US goods would have reached 125%, effectively plunging the bilateral trade relationship into a virtual embargo. Currently, US tariffs on Chinese goods remain at 30%, while China's tariffs on US goods remain at 10%. The truce extension provides a buffer period for both sides, particularly during the autumn peak import season for electronics, apparel, and toys.
Trade analysts' optimistic outlook
Wendy Cutler, a former senior U.S. trade official and current deputy director of the Asia Society Policy Institute, said the truce extension is "positive news." Combined with recent detente measures taken by both sides, it suggests China and the U.S. are paving the way for a possible "leaders' summit" in the fall. Trump previously revealed in a CNBC interview that the two countries are very close to reaching a trade agreement and plans to meet with the Chinese president before the end of the year. This statement further boosted market confidence in the Sino-U.S. trade negotiations.
Behind the negotiation strategy
Kelly Ann Shaw, a senior White House trade official during Trump's first term, noted that Trump's negotiating style often involves pushing the pressure until the very end. She believes that before agreeing to an extended truce, Trump may have pressed China for further concessions, such as increased soybean purchases. However, analysts are skeptical about the feasibility of such a deal and believe Trump may not reiterate this demand in the near future.
Buying time for long-term problems
Ryan Majerus, a former U.S. trade official now at the law firm King & Spalding, said the truce extension provides more time to resolve long-standing trade issues between China and the United States. As the two sides work to reach a framework agreement in the fall, the decision will undoubtedly ease market and business anxieties and create a more favorable environment for negotiations.
Paving the way for the Leaders' Summit
The extension of the tariff truce is driven not only by a temporary easing of trade tensions but also by preparations for a higher-level summit. Reuters noted that the strong personal relationship between Trump and Xi Jinping is considered a key factor in facilitating the negotiations. If the two sides can reach a broader trade agreement in the fall, it would inject stability into the global economy and avoid supply chain disruptions and price increases caused by an escalating tariff war.
Impact on the global economy
As the world's two largest economies, changes in the trade relationship between China and the United States have profound implications for global markets. The extended truce reduces cost pressures for American retailers and consumers while also providing a respite for Chinese exporters. Analysts point out that the next 90 days of negotiations will be crucial, with both sides needing to find a balance on complex issues such as overcapacity, export controls, and technology transfer.
The joint statement from the US-China Stockholm trade talks and the tariff truce extension signed by Trump mark another sign of compromise and cooperation between the two sides in their trade dispute. The 90-day extension not only buys businesses valuable time to recover, but also lays the groundwork for a possible autumn meeting between the leaders of China and the US. Experts generally believe that, despite remaining uncertainties in the negotiations, the restraint and dialogue shown by both sides offer hope for resolving long-standing trade issues. Whether China and the US can achieve breakthroughs in key areas in the coming months will warrant close global attention.
As a classic safe-haven asset, gold is often sought after during periods of heightened trade tensions or geopolitical uncertainty. Following the Stockholm talks, China and the United States agreed to suspend the 24% additional tariffs, retaining lower tariff levels (30% for the US and 10% for China), easing market concerns about an escalating trade war. This optimism has driven investors toward riskier assets, such as stocks, reducing the safe-haven demand for gold. Recent market data shows that gold prices often fall by 2%-3% following such trade easing news. For example, following the Geneva talks in May, gold prices plummeted from around $3,277 to $3,207 per ounce, closing down 2.73% that day.
While gold prices are under pressure in the short term due to trade easing, the long-term uncertainty surrounding the US-China trade negotiations remains supportive. The joint statement only marks a temporary 90-day truce and fails to address core issues such as technology transfer and overcapacity. Experts point out that if the negotiations break down or tariffs are reinstated, gold prices could still rebound due to a surge in safe-haven demand.
In summary, the extended US-China trade truce will put pressure on gold prices in the short term due to weakening safe-haven demand and a stronger US dollar, potentially causing prices to fall further to the $3,100-3,200 per ounce range. However, in the long term, uncertainty surrounding the negotiations, central bank gold purchasing demand, and inflation expectations will support the upward trend in gold prices. Investors should monitor the progress of the negotiations and the Federal Reserve's policy direction over the next 90 days to determine the next trajectory of gold prices.
At 09:03 Beijing time, spot gold was trading at $3354.33 per ounce.
Background and Progress of China-US Economic and Trade Talks
Ongoing dialogue from Geneva to Stockholm
As early as May 12, China and the United States reached a joint statement in Geneva, announcing the suspension of some high tariffs to buy time for further negotiations. Subsequently, the London talks on June 9-10 and the Stockholm talks on July 28-29 further consolidated this mechanism. During the Stockholm talks, Chinese Vice Premier He Lifeng held in-depth consultations with U.S. Treasury Secretary Scott Besant and U.S. Trade Representative Jamison Greer. Both sides reaffirmed the commitments made in the Geneva Joint Statement and reached agreement on specific measures.
The core content of the joint statement
According to the latest joint statement, the United States will amend the 24% ad valorem tariff imposed on Chinese goods (including those from Hong Kong and Macao) in Executive Order No. 14257 of April 2, 2025, suspending its implementation for 90 days starting August 12, while retaining the remaining 10% tariff. China has accordingly adjusted its Tax Commission Announcement No. 4 of 2025, also suspending the 24% tariff on US goods for 90 days, while retaining the 10% tariff. Furthermore, China has pledged to continue to suspend or remove non-tariff countermeasures against the United States in accordance with the Geneva Joint Declaration. This mutual concession demonstrates restraint and cooperation on both sides in the trade dispute.
Trump's tariff truce extension
The White House's latest moves
On August 11, Reuters reported that US President Trump signed an executive order extending the US-China tariff truce until mid-November. This move prevented a significant escalation of tariffs that had been scheduled to expire in the early hours of August 12. According to White House officials, this decision provides US retailers with valuable time to stock up for the year-end shopping season and avoids the cost surges caused by high tariffs.
Trump's statements and strategies
Before signing the executive order, Trump remained ambiguous at a press conference about whether to maintain the lower tariffs, but then quickly took action, demonstrating his flexible negotiating style. At the press conference, he expressed a good relationship with the Chinese president and said China had "behaved very well" recently. Trump also demanded on Sunday that China double its purchases of US soybeans, but it is unclear whether China will agree to this condition. Analysts believe this request may be a probing tactic by Trump in the negotiations, intended to gain more leverage in subsequent talks.
Avoid the consequences of a trade embargo
Without this truce extension, US tariffs on Chinese goods would have soared to 145%, while China's tariffs on US goods would have reached 125%, effectively plunging the bilateral trade relationship into a virtual embargo. Currently, US tariffs on Chinese goods remain at 30%, while China's tariffs on US goods remain at 10%. The truce extension provides a buffer period for both sides, particularly during the autumn peak import season for electronics, apparel, and toys.
Expert and market reactions
Trade analysts' optimistic outlook
Wendy Cutler, a former senior U.S. trade official and current deputy director of the Asia Society Policy Institute, said the truce extension is "positive news." Combined with recent detente measures taken by both sides, it suggests China and the U.S. are paving the way for a possible "leaders' summit" in the fall. Trump previously revealed in a CNBC interview that the two countries are very close to reaching a trade agreement and plans to meet with the Chinese president before the end of the year. This statement further boosted market confidence in the Sino-U.S. trade negotiations.
Behind the negotiation strategy
Kelly Ann Shaw, a senior White House trade official during Trump's first term, noted that Trump's negotiating style often involves pushing the pressure until the very end. She believes that before agreeing to an extended truce, Trump may have pressed China for further concessions, such as increased soybean purchases. However, analysts are skeptical about the feasibility of such a deal and believe Trump may not reiterate this demand in the near future.
Buying time for long-term problems
Ryan Majerus, a former U.S. trade official now at the law firm King & Spalding, said the truce extension provides more time to resolve long-standing trade issues between China and the United States. As the two sides work to reach a framework agreement in the fall, the decision will undoubtedly ease market and business anxieties and create a more favorable environment for negotiations.
The Significance and Outlook of the Sino-US Trade Truce
Paving the way for the Leaders' Summit
The extension of the tariff truce is driven not only by a temporary easing of trade tensions but also by preparations for a higher-level summit. Reuters noted that the strong personal relationship between Trump and Xi Jinping is considered a key factor in facilitating the negotiations. If the two sides can reach a broader trade agreement in the fall, it would inject stability into the global economy and avoid supply chain disruptions and price increases caused by an escalating tariff war.
Impact on the global economy
As the world's two largest economies, changes in the trade relationship between China and the United States have profound implications for global markets. The extended truce reduces cost pressures for American retailers and consumers while also providing a respite for Chinese exporters. Analysts point out that the next 90 days of negotiations will be crucial, with both sides needing to find a balance on complex issues such as overcapacity, export controls, and technology transfer.
Summarize
The joint statement from the US-China Stockholm trade talks and the tariff truce extension signed by Trump mark another sign of compromise and cooperation between the two sides in their trade dispute. The 90-day extension not only buys businesses valuable time to recover, but also lays the groundwork for a possible autumn meeting between the leaders of China and the US. Experts generally believe that, despite remaining uncertainties in the negotiations, the restraint and dialogue shown by both sides offer hope for resolving long-standing trade issues. Whether China and the US can achieve breakthroughs in key areas in the coming months will warrant close global attention.
As a classic safe-haven asset, gold is often sought after during periods of heightened trade tensions or geopolitical uncertainty. Following the Stockholm talks, China and the United States agreed to suspend the 24% additional tariffs, retaining lower tariff levels (30% for the US and 10% for China), easing market concerns about an escalating trade war. This optimism has driven investors toward riskier assets, such as stocks, reducing the safe-haven demand for gold. Recent market data shows that gold prices often fall by 2%-3% following such trade easing news. For example, following the Geneva talks in May, gold prices plummeted from around $3,277 to $3,207 per ounce, closing down 2.73% that day.
While gold prices are under pressure in the short term due to trade easing, the long-term uncertainty surrounding the US-China trade negotiations remains supportive. The joint statement only marks a temporary 90-day truce and fails to address core issues such as technology transfer and overcapacity. Experts point out that if the negotiations break down or tariffs are reinstated, gold prices could still rebound due to a surge in safe-haven demand.
In summary, the extended US-China trade truce will put pressure on gold prices in the short term due to weakening safe-haven demand and a stronger US dollar, potentially causing prices to fall further to the $3,100-3,200 per ounce range. However, in the long term, uncertainty surrounding the negotiations, central bank gold purchasing demand, and inflation expectations will support the upward trend in gold prices. Investors should monitor the progress of the negotiations and the Federal Reserve's policy direction over the next 90 days to determine the next trajectory of gold prices.
At 09:03 Beijing time, spot gold was trading at $3354.33 per ounce.
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