U.S.-China tariff extension still uncertain as disputes resurface

August 11, 2025 (MLN): The U.S. and China have yet to declare an extension to their tariff deadline, with tensions over several thorny issues flaring just as a fragile truce nears its expiry.

Following a July bilateral meeting in Stockholm, Beijing struck an optimistic tone, saying both sides would work toward a 90-day extension.

U.S. negotiators, however, left the decision to President Donald Trump, who has given little indication of his stance, stoking concerns that tensions between the world’s two largest economies could escalate.

In May, the two sides agreed to a truce that reduced tariffs from April’s prohibitive 145% and paused punitive measures, creating space for further talks.

That agreement expires Tuesday. Currently, China’s U.S.-bound shipments face a 20% tariff over alleged fentanyl-related issues, a 10% baseline tariff, and a 25% duty on select goods from Trump’s first term.

U.S. exports to China face tariffs of over 32.6%, according to the Peterson Institute for International Economics.

Both the Office of the U.S. Trade Representative and China’s Ministry of Foreign Affairs declined to comment.

Still, analysts expect a Trump–Xi summit in Beijing in the coming months, as CNBC reported.

“That implies a more stable relationship but by no means a friendlier one,” said Ian Bremmer of Eurasia Group, noting the two nations are structurally moving toward decoupling.

Despite the truce, trade has been hit hard.
China’s July exports to the U.S. fell 21.7% year-on-year, marking a fourth straight monthly drop, while imports from the U.S. fell 10.3% in January–July.

A potential deal could see Beijing commit to boosting purchases of U.S. goods, especially energy, agricultural products, and, if permitted, semiconductors.

Julian Evans-Pritchard of Capital Economics suggested any deal could be a “sequel” to the phase-one agreement signed in January 2020, which pledged $200 billion in additional U.S. goods and services purchases above 2017 levels.

That target was missed as the pandemic disrupted trade.

Trump might seek to revive and raise those targets.

On Sunday night, Trump posted on Truth Social that he hoped China would “quickly quadruple” soybean orders.

Chinese soybean imports have already surged in recent months, with May, June, and July showing double-digit year-on-year growth.

While China’s exports to the U.S. have dropped 12.6% this year through July, they have been largely offset by 13.5% growth to Southeast Asia, raising concerns over “transshipment” to bypass tariffs.

Trump has threatened a 40% blanket tariff on goods routed through third-party countries, though without clarifying definitions.

Semiconductor export controls remain a flashpoint. Nvidia plans to resume sales of its H20 chip to China, reversing Trump’s April restrictions.

Gabriel Wildau of Teneo called the move a “modest course correction” rather than a strategic shift.

Concessions on certain export controls could be part of a deal, though national security hawks warn that easing restrictions risks boosting China’s AI and military capabilities.

Beijing has pushed for the U.S. to lift controls on high-bandwidth memory chips, which were banned under former President Joe Biden in 2024.

According to the Financial Times, Nvidia and AMD have agreed to give the U.S. government 15% of revenues from chip sales to China to secure export licenses, a move Stephen Olson, a former U.S. trade negotiator, described as the “monetization” of U.S. trade policy.

China’s dominance in rare earths adds another layer to the negotiations. In June, Beijing relaxed its export ban on rare-earth metals and magnets to the U.S. and sped up licensing.

Rare-earth exports surged 60% globally that month to the highest level since 2012 before dipping in July.

Shipments of rare-earth magnets to the U.S. in June jumped more than sevenfold from the prior month.

Another sticking point is Trump’s threat of further tariffs over Beijing’s purchases of Russian oil. China remains the largest buyer of Russian crude, followed by India, which saw U.S. tariffs doubled to 50% last week.

Asked about penalizing China for the same, Trump replied: “I can’t tell you yet… One of them could be China.”

China’s imports from Russia in July edged up to $10.06 billion, the highest since March, though still down 7.7% year-on-year.

Last week, Xi Jinping held an unusual summer-vacation phone call with Vladimir Putin ahead of the Russian leader’s upcoming meeting with Trump on the Ukraine war.

Neo Wang of Evercore ISI said both Xi and Putin likely aim to leverage their ties in talks with Trump by keeping him guessing about their discussions.

With the tariff truce days from expiring and major sticking points unresolved, the prospect of an extended U.S.-China economic détente remains uncertain, even as both sides weigh the costs of renewed confrontation.

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