Trade War Monitor, Aug. 11: Trump Extends Tariff Truce with China by 90 Days

U.S. President Donald Trump has extended a ceasefire in the ongoing U.S.-China trade war by delaying planned steep tariff hikes on Chinese goods for another 90 days. The new deadline is now set for November 9, 2025, with the change announced just hours before the previous tariff increase was to expire. This extension follows talks in Stockholm between U.S. and Chinese negotiators, which had been expected to produce such a temporary reprieve[para. 1][para. 2][para. 3].

Despite the continued uncertainty due to simmering trade tensions, China’s exports performed better than expected in July 2025, growing 7.2% year-on-year in dollar terms and outpacing market forecasts. This strength was attributed to robust demand from outside the U.S., with exports to the European Union rising 9.3% and to Africa surging to a 42.5% year-on-year gain. However, shipments to the U.S. dropped by 21.6%. Overall, China’s trade surplus in July reached $98.2 billion, boosted by increased exports of production materials, machinery, and microchips, especially to emerging markets like ASEAN and Latin America[para. 4][para. 7][para. 8][para. 10][para. 12][para. 13][para. 14].

The trend of shifting China's export focus from the U.S. to emerging markets is viewed as a response to both changing global demand and strategies such as “front-loading” before expected tariff increases. Collaborations with emerging economies, particularly in energy and resource commodities, have further reinforced these gains[para. 11][para. 14].

China's services trade also saw record growth, rising 8% year-on-year to nearly 3.9 trillion yuan ($542 billion) in the first half of the year—the highest since records began in 2016. This surge was predominantly driven by a 12.3% increase in travel services and a 6% expansion in knowledge-intensive sectors like finance and technology consulting[para. 5][para. 17][para. 18].

On the inflation front, China’s consumer price index (CPI) leveled off in July, remaining flat year-on-year following a slight rebound in June. Lower food prices, particularly for fruits, vegetables, and pork, contributed to this stabilization. The core CPI, which excludes food and energy, edged up to 0.8% year-on-year. Meanwhile, the producer price index (PPI) continued its 3.6% annual decline, though some sectors showed marginal improvement due to government anti-competition campaigns[para. 19][para. 20].

In the technology sector, Nvidia announced compliance with U.S. regulations concerning China AI chip sales, denying rumors that it had agreed to remit 15% of its China AI chip sales revenue to the U.S. government. The U.S. has recently reauthorized Nvidia's H20 AI chip sales to China, while Chinese tech companies are forming alliances to compete in this market. Similar rumors have emerged about AMD, though the company has not commented[para. 21][para. 22][para. 23].

Chinese construction firms are being urged to diversify internationally, as traditional overseas markets slow and trade war risks persist. From 2020 to 2024, the value of new contracts signed by Chinese contractors grew modestly from $255 billion to $264.3 billion, with completed turnover rising from $155.9 billion to $166 billion. However, growth has slowed versus the previous five years, signaling the need for new strategies and market exploration for the 2026-2030 period[para. 24][para. 26][para. 27][para. 28].

Trump’s trade policy, marked by sudden threats, rolling deadlines, and nonbinding agreements, has replaced structured negotiations, creating a landscape of perpetual uncertainty for international trade. The U.S. is leveraging tariffs not only for economic goals but for broader policy aims, considering measures such as “investment-for-tariffs” deals, secondary tariffs on Russian oil importers, and new tariffs on products like copper, pharmaceuticals, and semiconductors. Unlike past trade deal cycles, dollar weakness may not follow, as the U.S. pivots to fiscal consolidation rather than currency devaluation[para. 29][para. 30][para. 31][para. 32][para. 34][para. 35].