Trump has extended the suspension of tariffs on China for the second time: What does this mean?
On August 11 local time, Trump signed an executive order, extending the suspension of imposing significant tariffs on Chinese goods for another 90 days until around November 10. This move has multiple significances, as follows:
Reflecting the phased easing of China-Us economic and trade relations:
Create a rational and normal atmosphere for subsequent bilateral trade consultations.
It reflects that both sides have a practical willingness to compromise:
The trade friction between China and the United States has had an impact on the economies of both countries. The unilateral imposition of tariffs by the United States failed to meet expectations. China responded resolutely and forcefully, not giving in despite the threat of high tariffs. The two sides remained deadlocked. The extension of the tariff suspension period at this time indicates that both China and the United States recognize that "harmony benefits both, while confrontation harms both", and are willing to compromise with each other at the economic and trade level, adopting a pragmatic attitude to prevent further escalation of economic and trade conflicts.
Help stabilize the sentiment of the global financial market:
When the United States announced "reciprocal tariffs" in April this year, it caused a stir in the global financial market. The extension of the suspension period of tariffs between the United States and China has enabled global investors to see that the economic and trade contradictions between the two countries will not deteriorate sharply for the time being. This has alleviated market concerns that the escalation of economic and trade frictions will impact global economic and financial stability, and has played a positive role in promoting the stability of global stock markets, foreign exchange markets, etc.
Facilitate imports for the US Christmas season:
Extending the trade "truce" until early November is of great significance to the crucial autumn import season for the United States. A large number of electronic products, clothing, toys and other goods made in China are the main commodities in the US market before Christmas. This measure enables these goods to continue to enter the US at relatively low tariffs, which helps to ensure the supply of the US market, prevent the procurement costs of US merchants from soaring, and also prevent a significant increase in the holiday shopping expenditure of US consumers.
To facilitate the US side's coordinated advancement of trade negotiation affairs:
The current trade negotiation agenda of the United States with many countries is heavy. Treasury Secretary Bessent once said that the trade negotiations between the United States and most countries would be completed before October. The US side needs to first stabilize the tariff situation with China, free up hands to finalize other trade agreements one by one, and then focus on reaching trade agreements with China. Therefore, it is necessary to extend the tariff deferral period with China.
Why does Trump take a flexible stance towards China on trade issues?
The large-scale imposition of tariffs on China by the United States has already had a policy backlash. In the first quarter of 2025, the US gross domestic product (GDP) shrank by 0.3% quarter-on-quarter at an annualized rate, and high tariffs impacted the growth trend of the US economy. The US stock market also experienced severe fluctuations due to the tariff policy. To restore investor confidence, Trump wanted to send a positive signal to the market through tariff adjustments. Meanwhile, China has imposed export controls on key resources such as rare earths, while the domestic refining capacity in the United States is nearly zero. This has put pressure on the supply of the US military industry and other fields, restricting the US in trade games.
The additional tariffs imposed by the United States have led to a rise in the prices of imported Chinese goods, exacerbated inflation, and increased the daily living costs of the people. The opposition to tariffs in the public opinion field has continued to grow. A poll by CNBC in the United States showed that in early April, about 80% of the public expressed resistance to the government's tariff policy. American retailers, importers and interest groups in the automotive and other industries have also been constantly pressuring the government to adjust tariffs on China. The Trump administration is facing huge dual pressure from public opinion and interest groups.
Trump adheres to the mindset of "transactional leadership" and is keen on using unpredictability to gain bargaining chips in negotiations. He frequently released information about the contact and consultation between China and the United States, attempting to create the illusion that China is eager to negotiate with the United States, thereby exerting time pressure on other trade negotiation partners such as India, Japan and South Korea, and forcing them to make concessions more quickly in economic and trade negotiations with the United States to avoid being isolated. Furthermore, Trump used tariffs as a bargaining tool, deliberately blurring his stance on tariff adjustments, and using wavering positions to disrupt China's judgment, attempting to make China make more compromises at the negotiating table under the circumstances of information asymmetry.
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