US-China trade war truce extended for another 90 days
Trump signs order, asks Beijing to quadruple American soybean purchases
China and the U.S. have held multiple rounds of talks to discuss economic disputes. © Reuters
NEW YORK/SHANGHAI -- U.S. President Donald Trump has signed an executive order to extend a tariff truce between the U.S. and China for another 90 days on Monday, the White House said.
The trade truce was set to expire on Tuesday. The new deadline is 12:01 a.m. eastern time on Nov. 10, according to Trump's order, which reiterated concerns about a "lack of trade reciprocity" and economic security while crediting China with taking "significant steps toward remedying non-reciprocal trade arrangements."
Chinese state broadcaster CCTV also confirmed the extension.
The move keeps a lid on a trade war that had worsened when Trump imposed 145% tariffs on Chinese imports in April, triggering a retaliatory rate of 125% from Beijing.
The first 90-day truce was agreed upon by trade representatives from the two countries in Geneva on May 12. They met again at the end of July and agreed to continue pushing for an extension.
Last week, Trump said the two sides were "getting very close to a deal" and that he would meet Chinese counterpart Xi Jinping before the end of the year if they reach an agreement. On Monday, Trump posted on social media that he hopes "China will quickly quadruple its soybean orders" from American farmers, adding that doing so would help reduce the large trade deficit with China.
After signing the extension order, Trump wrote on Truth Social, "All other elements of the Agreement will remain the same."
China's Ministry of Commerce said it will remove 12 U.S. companies from its export control list and suspend the inclusion of another 16 for 90 days.
Chinese Embassy spokesperson Liu Pengyu told Nikkei Asia, "We hope the U.S. will continue to work with China to implement the important consensus reached during the two heads of state's phone call," referring to the June conversation between Trump and Xi. The trade consultations should be based on "equality, mutual respect and reciprocity," he said, so as to "enhance understanding, reduce misperceptions, and strengthen cooperation through dialogue and communication."
Even with the truce in place, Trump's administration has imposed an additional 30% tariff on Chinese goods since March, including a 20% "fentanyl tariff" over China's alleged role in the proliferation of illicit narcotics. China added a 10% levy on American products and introduced export controls on rare earths used in electric vehicles and weapons.
Trump's tariffs have so far failed to dent China's export machine. Overall export growth beat expectations in July, as declines in shipments to the U.S. were offset by gains elsewhere. But with falling property sales and a slowdown in manufacturing activity, China has little to gain from escalating trade tensions with the U.S. again.
The extension was not a surprise, according to Zhang Zhiwei, president and chief economist at Pinpoint Asset Management. "Investors already assumed the deadline would be extended," he said. "The trade negotiation is an ongoing process that will take months. Hiking the tariffs again now would not achieve anything."
Soybean plants sprout at a farm in Illinois in May 2024. Trump has called on China to increase purchases of the legumes from the U.S. © ReutersIn recent months, tensions have centered on certain areas like semiconductors, a crucial component of artificial intelligence systems that the U.S. and China are racing to lead.
The U.S. recently began issuing export licenses for Nvidia's H20 chips after halting them in April, according to U.S. media reports. But Yuyuan Tantian, an account affiliated with Chinese state broadcaster CCTV, on Sunday said on social media that the H20 could have a possible "back door" that allows tracking of its location and how it is used.
"The H20 cannot be considered a safe chip for China, nor can it be considered an environmentally friendly chip, and it certainly cannot be considered an advanced chip," the account wrote.
In a White House news conference on Monday, Trump said the H20 was "obsolete" and that it was "an old chip that China already has."
The president said he proposed to Nvidia CEO Jensen Huang an arrangement where the company pays 20% of its revenues from China to the U.S. government and that the two sides ultimately settled for 15%.
While Trump said that Nvidia's most advanced AI chip, the Blackwell, will not be given to China, he said it could be offered if its capabilities were "unenhanced" by 30% to 50%. He compared it to sales of American fighter jets to other countries.
Trump said he and Huang are scheduled to meet over this topic.
Trade delegations from both countries met in Stockholm in July, where they discussed a wide range of issues including China's manufacturing overcapacity, China's purchase of Russian oil and its provision of dual-use technologies to Russia.
Trump has said he may impose additional tariffs over China's purchase of Russian oil, as he did against India last week.
China has defended its stance, saying its economic and energy ties with Russia are legitimate and legal. Trump and Russian President Vladimir Putin are scheduled to meet in Alaska on Friday.
The two sides also discussed the export of rare-earth magnets from China to the U.S., which have resumed after China had earlier cut off the export of rare-earth elements and magnets.
Negotiations between the U.S. and China in recent months have clarified "the asymmetry of the two countries' interdependence," said Ali Wyne, senior research and advocacy adviser on U.S.-China relations at International Crisis Group.
"It will likely be easier for China to innovate around U.S. restrictions on chipmaking technology in the near term than it will be for the United States to diversify away from China as a source of rare earths," he said.
Sean Stein, president of the U.S.-China Business Council, said that "securing an agreement on fentanyl that leads to a reduction in U.S. tariffs and a rollback of China's retaliatory measures is acutely needed to restart U.S. agriculture and energy exports."
The latest move gives businesses more certainty as American importers continue to pay on average 54.9% duties on Chinese goods, while businesses in China pay an average of 32.6%, according to the Peterson Institute for International Economics.
Most imports into the U.S. face a baseline 10% duty, with varying rates for certain products. American tariffs have increased to their highest levels since 1935, during the Great Depression.
Additional reporting by Ken Moriyasu in Washington.
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