Is There Another Tariff Agreement from China and the US?

Tensions between the world’s two largest economies have entered a new phase of cautious diplomacy. 

As of late July 2025, the United States and China have agreed to extend their existing tariff truce for another 90 days, postponing any new trade escalations while maintaining an open channel for further negotiations. 

While this decision does not constitute a new comprehensive tariff agreement, it provides both countries with strategic breathing room.

The extension, set to begin immediately after the original ceasefire expires on August 12, 2025, will carry through until mid-November. 

This diplomatic maneuver reflects a growing realization that while a grand bargain is not yet achievable, stability is critical for both geopolitical and economic reasons.

What Has Been Agreed in Stockholm?

90-Day Tariff Truce Extension

Trade officials from both countries met in Stockholm, Sweden, and agreed to extend the current pause on imposing new tariffs for another three months. This temporary arrangement is a direct continuation of the original tariff pause agreed upon in May 2025.

During the truce:

• No new tariffs will be introduced by either side.

• Tariffs that were previously reduced such as a rollback from 145% to 30% on some US-imposed tariffs and from 125% to 10% on reciprocal Chinese tariffs remain in place.

• Ongoing talks will focus on core trade issues and aim to de-risk the economic relationship.

Read Also: US–Indonesia Tariff Deal: Was It a Fair Trade?

Why the Extension Matters

This isn’t just about tariffs. It’s about managing a fragile geopolitical balance while preventing an economic shock. 

Although the talks in Stockholm yielded no sweeping trade deal, the extension is viewed as a tactical move to keep negotiations alive, reduce uncertainty in financial markets, and avoid unnecessary trade retaliation.

This extended truce:

• Prevents a new wave of tariffs

• Buys time for technical-level negotiations on contentious sectors

• Sets the groundwork for potential high-level summits between US President and Chinese leadership in Q4 2025

Read Also: Is the Trade War Over? Looking at Trump's New Tariff Adjustment for China

Core Issues on the Negotiation Table

1. Industrial Policy and Overcapacity

One of the most persistent concerns raised by the US is China’s massive state subsidies for its industrial sectors. These subsidies contribute to overcapacity in sectors like EVs, batteries, and solar panels, leading to global price distortion.

US officials argue that this practice undermines global competition, while Chinese officials defend it as essential to their national development model.

2. Fentanyl-Linked Tariffs

Another focal point is the use of tariffs as leverage against fentanyl trafficking. The US has proposed additional tarrifs on sectors linked to fentanyl precursor chemicals in an attempt to pressure Beijing to enforce stricter drug control measures.

China has condemned the linkage as “politically motivated” but appears willing to engage in limited discussions on enforcement transparency.

3. Export Controls and Tech Barriers

The US continues to enforce semiconductor export controls on high-end AI and quantum computing chips, prompting reciprocal moves by China, including investment restrictions and tech bans. These non-tariff measures are now central to broader trade frictions.

Read Also: Tariffs Bring More Revenue for the US! But Is It Sustainable?

The Real Impact on the Global Economy

Easing Short-Term Volatility

From an economic perspective, the extension helps prevent another wave of inflationary shocks. Tariffs typically raise prices on imported goods, disrupt supply chains, and increase costs for manufacturers and consumers. With the truce in place:

• Supply chain bottlenecks ease slightly

• Import/export stability improves

• Investor confidence strengthens in global markets

A Ceasefire, Not a Peace Treaty

Despite these benefits, most existing tariffs remain in place, and the trade relationship remains highly volatile. The truce is more of a symbolic gesture than a structural shift.

Key risks remain:

• Ongoing uncertainty for multinational businesses

• Elevated input costs for industries in both countries

• Delayed investment and hiring decisions

Read Also: Did the Market Just Became Bullish? Looking at the Sentiment from Tariff Decisions

Why There’s No New Comprehensive Agreement (Yet)

A full-scale agreement remains elusive due to deep structural disagreements. Core sticking points include:

• IP protection

• Technology transfer demands

• Subsidy transparency

• Market access restrictions

Political constraints further complicate matters. With elections looming in the US and ongoing domestic pressures in China, neither side appears willing to concede significantly on sensitive issues.

Rather than aiming for a grand trade agreement, both countries appear to be pursuing a “managed competition” model avoiding escalation while maintaining strategic rivalry.

Read Also: Trump Plans New Tariff Policy! Why This Can Reduce Market Confidence

Strategic Implications of the Truce Extension

Keeping Dialogue Alive

The 90-day extension allows diplomats to continue engaging on tough issues without the threat of escalation. It also signals to global markets that both governments are willing to exercise restraint amid rising geopolitical pressures.

Setting the Stage for Leadership Summits

Should the talks progress meaningfully, the extended truce may pave the way for a high-level summit later in 2025. Such a meeting could be instrumental in unlocking sector-specific deals or laying the groundwork for a longer-term framework.

Implications for Third-Party Countries

Other economies, especially those heavily reliant on global supply chains like Germany, Japan, South Korea, and ASEAN nations, welcome the pause. It reduces spillover risk and helps stabilize global trade dynamics.

Read Also: Is the US Becoming More Profitable? Analyzing Its Recent Tax Revenue After Tariffs

Final Outlook

In essence, the US-China tariff environment remains frozen in a strategic pause stable, but unresolved. While there is no new formal agreement, the decision to extend the truce reflects a shared interest in avoiding economic self-harm. 

But without addressing deeper structural issues, this ceasefire could be temporary relief before another storm.

The coming months will test whether this calm leads to lasting cooperation or simply delays another chapter in a long-running trade conflict.

FAQ

Is there a new US-China tariff agreement in 2025?

No. As of July 2025, there is no comprehensive new tariff agreement. The countries have agreed only to extend a temporary truce for another 90 days.

What does the 90-day extension cover?

It suspends any new tariff impositions and maintains reduced tariff rates on selected goods to support ongoing negotiations.

What are the major issues being negotiated?

Key topics include China’s industrial subsidies, fentanyl-linked trade penalties, technology export restrictions, and market access.

Are tariffs being permanently removed?

No. Most tariffs remain in place. The reductions are partial and temporary, aimed at easing tensions rather than removing barriers outright.

Will there be a long-term trade agreement?

Uncertain. While talks continue, deep political and structural divides make a comprehensive deal unlikely in the near term.

Bitrue Official Website:

Website: https://www.bitrue.com/

Sign Up: https://www.bitrue.com/user/register

Disclaimer: The views expressed belong exclusively to the author and do not reflect the views of this platform. This platform and its affiliates disclaim any responsibility for the accuracy or suitability of the information provided. It is for informational purposes only and not intended as financial or investment advice.