China extends US trade truce by 90 days after Trump order on the same

China’s Commerce Ministry has extended its trade truce with the U.S. by 90 days, mirroring a U.S. executive order. This action suspends additional tariffs on U.S. goods, commits to reducing non-tariff barriers, and postpones adding U.S. firms to unreliable entity and export control lists. The extension maintains current tariff levels (U.S. 30-50%, China 10-20%) until November 10, significantly lower than previous rates, and preserves the recent reopening of U.S. chip exports and Chinese rare earths trade, indicating continued de-escalation in bilateral trade relations.

Analysis

The U.S. and China have extended their trade truce by another 90 days until November 10, signaling a continued de-escalation of bilateral economic tensions. This development, reflected in the moderately positive market sentiment and risk-on tone, involves China suspending additional tariffs and postponing the inclusion of U.S. firms on its unreliable entity list. Critically, the agreement maintains the substantially reduced tariff levels agreed upon in May, with U.S. tariffs on Chinese goods remaining at 30-50% and Chinese tariffs on U.S. goods at 10-20%, down from previous peaks of over 100%. This extension provides significant near-term stability for global supply chains, particularly by preserving the flow of U.S. chip exports and Chinese rare earths. However, the temporary 90-day nature of the agreement underscores that underlying geopolitical risks persist, and the existing tariffs, while lower, still represent a significant barrier to trade.

Key Decisions for Investors

• Consider the near-term positive catalyst for sectors highly sensitive to trade tensions, particularly U.S. semiconductors and industries dependent on Chinese rare earths, which benefit directly from the supply chain stability.
• Maintain a cautious outlook beyond the immediate term, as the 90-day extension provides only temporary relief and does not resolve the fundamental strategic disagreements between the U.S. and China.
• Monitor diplomatic progress on reducing non-tariff barriers and any rhetoric leading up to the November deadline, as these will be key indicators for assessing the likelihood of a further extension or a return to heightened tensions.