Trade War Monitor, Aug. 4: U.S., China Buy More Time to Resolve Trade tensions

The United States and China have agreed to extend their existing trade war truce for another 90 days after high-level discussions in Stockholm on July 29, 2025. This decision aims to provide temporary stability in the economic relationship between the two countries, which together comprise the world's two largest economies. Both parties agreed to maintain a pause on the mutual tariffs affecting about 24% of the goods hit since the start of the conflict, deferring any escalation while negotiations continue. Initially, a 90-day truce was set in early May, due to expire next month, now postponed further to encourage ongoing dialogue rather than conflict, a move appreciated by businesses and financial markets globally [para. 1][para. 6][para. 8].

Despite this show of cooperation, China’s cyberspace regulator, the CAC, summoned Nvidia executives to discuss alleged “security risk issues” associated with its H20 chip, which is designed for the Chinese market and conforms to U.S. export controls. According to the CAC, the chip contains backdoor vulnerabilities via tracking and remote shutdown features. This action comes amid broader U.S.-China disputes, showing that the relationship's complexity extends far beyond tariffs into national security and technology concerns [para. 2][para. 9][para. 11].

In the midst of these trade and tech tensions, the global ports deal involving Hong Kong tycoon Li Ka-shing is under revision. CK Hutchison Holdings, Li’s company, is attempting to sell its worldwide ports portfolio—valued at $14.2 billion—and is now including a major Chinese state-owned enterprise, China Cosco Shipping Corp., in the U.S.-led consortium in an attempt to manage regulatory scrutiny. Additionally, Panama is suing CK Hutchison, the holder of two key ports at opposite ends of the Panama Canal, contesting its rights to operate them. If Panama’s Supreme Court finds the operator’s renewal invalid, the government may reclaim and restructure the ports into public-private partnerships. The case gained prominence after U.S. President Donald Trump, inaugurated January 20, 2025, pledged in his inaugural address to curb Chinese influence over the Panama Canal [para. 4][para. 18][para. 22][para. 23][para. 26].

China’s top decision-making body, the Politburo, has adopted a cautious economic stance, calling for “continuity and stability” coupled with flexibility and no urgent new stimulus, following better-than-expected economic growth in the first half of 2025 (GDP up 5.3%) [para. 28][para. 29][para. 30]. Echoing this optimism, the International Monetary Fund revised its 2025 global growth forecast to 3%, up from 2.8%, partly because of front-loading exports ahead of tariffs and improved trade conditions [para. 33][para. 34].

Apple Inc. experienced its first quarterly revenue growth in China in nearly two years, reporting $15.4 billion for Q2, a 4.35% year-on-year increase, thanks largely to government consumer trade-in subsidies [para. 36][para. 37][para. 38]. Nonetheless, China faces domestic economic pressure from weak prices, primarily driven by insufficient internal demand and exacerbated by U.S.-led tariff wars. Policymakers believe supporting non-U.S. export growth is key to easing these deflationary pressures [para. 41][para. 42].

Internationally, Brazil’s rare earth exports to China tripled in the first half of 2025 to $6.7 million, underscoring the rising strategic value of rare earths in the context of ongoing U.S.-China competition [para. 45][para. 46][para. 47]. [para. 1][para. 2][para. 3][para. 4][para. 5][para. 6][para. 7][para. 8][para. 9][para. 10][para. 11][para. 12][para. 13][para. 14][para. 15][para. 16][para. 17][para. 18][para. 19][para. 20][para. 21][para. 22][para. 23][para. 24][para. 25][para. 26][para. 27][para. 28][para. 29][para. 30][para. 31][para. 32][para. 33][para. 34][para. 35][para. 36][para. 37][para. 38][para. 39][para. 40][para. 41][para. 42][para. 43][para. 44][para. 45][para. 46][para. 47]