As the deadline approaches, the extension of the US-China truce depends on balance

The US and China have not yet announced an extension of the tariff deadline. As the fragile ceasefire approaches expiration, tensions over some troubling issues reignite.

Following the latest bilateral meeting in Stockholm in July, Beijing spoke optimistic.

But US negotiators had placed the ball in President Donald Trump’s court by extending the tariff ceasefire. Trump has so far provided almost no indication as to whether he will go for an extension, and has raised concerns that tensions between the two biggest economies in the world could rise again.

In May, the two agreed to a 90-day tariff ceasefire, reducing the 145% mission in April, suspending a series of punitive measures, allowing room for further negotiations to reach permanent deals. The agreement is set to expire on Tuesday.

Currently, China’s US-bound cargo faces 20% tariffs related to the country’s alleged role in the flow of fentanyl to the US, and 10% baseline tariffs stacked on top of the 25% obligations on certain goods imposed during Trump’s first term. According to the Peterson Institute for International Economics, American goods on China are subject to tariffs of more than 32.6%.

The US Trade Representative and the Chinese Foreign Ministry office did not respond to CNBC’s request for comment.

The official tariff extension still falls on balance, but experts are widely hoping that a summit between Trump and XI will take place in Beijing in the coming months.

“That means a more stable US-China relationship…but it’s by no means a friendly relationship,” said Ian Bremer, president and founder of Eurasia Group, who said both sides are “more towards separating themselves as a result of a new global trade and the geopolitical environment.”

Despite the tariff ceasefire, trade between Washington and Beijing was effectively hit.

China’s July trade data showed exports to the US shrink for the fourth consecutive month, down 21.7% from the previous year. Shipping in May was the most sunk since the start of the pandemic, according to data from Wind Information.

Potential trade agreements could involve China to intensify the purchase of US goods, particularly energy and agricultural products, and if the US allows it, semiconductors and chip-making equipment would be the head of Chinese economics for capital economics, Julian Evans Pritchard.

Overall China’s imports from the US fell 10.3% during the January-July period.

The final deal could take a variety of forms, Evans Pritchard said one of the most likely results would be a “sequel” to the Phase 1 contract signed in January 2020.

At the time, China had agreed to an increase of $200 billion in annual purchases of US goods and services compared to the 2017 level.

“It’s plausible that Trump could treat Phase 1 deals as an unfinished business and revamp it with a higher purchasing goal,” added Evans Pritchard.

In a post on Truth Social Sunday Night Stateside, Trump said he hopes China will “speed up quadruple the soybean order.” China has increased its soybean purchases in recent months, up 36.2%, 10.4% and 18.4% in May, June and July, respectively, according to Wind.

China’s total exports to the US fell 12.6% as of July this year. However, it is largely offset by 13.5% export growth to Southeast Asian countries, monitoring so-called “transportation” surveillance.

Trade experts have warned that exports could slow down in the coming months as Trump collects 40% of blankets on goods routed through third-party countries – as they collect tariffs on blankets for goods routed through third-party countries – but it is little clear how those shipments will be defined.

Despite NVIDIA’s plans to resume sales of its H20 chips to China, tensions between the US and China over semiconductor export restrictions have also escalated in recent weeks, reversing export controls for H20 sales imposed by Trump in April.

The reopening of H20 marked “a modest course revision rather than a strategic change,” said Gabriel Wildow, managing director of political consultant Teno, who said there would be no substantial easing of export controls.

That said, Trump may consider offering concessions on export controls that others in his administration consider to be “excessive” to enter into a deal with Beijing, Wildow added.

The resumption of sales for the H20 comes as the Trump administration’s national security hawk warns that US chips and other technologies can strengthen China’s AI sector and its military. Others have argued that further restrictions could risk backfiring and urge Beijing to develop domestic alternatives and accelerate efforts to reduce dependence on American suppliers.

Chinese officials pushed the US to facilitate export control of high-bandwidth memory chips that were banned from freight to China by former President Joe Biden in 2024 – The Financial Times reported on Sunday. nvidia and AMD According to the Financial Times, in order to secure export licences, the US government agreed to give 15% of revenue from CHIP sales to 15% from sales to China.

“What we’re looking at is effectively monetising US trade policies that American companies have to pay to the US government for permission to export. If so, we’ve entered a new and dangerous world,” said Stephen Olson, a senior visiting fellow at the Iseasof Ishak Institute and a former US trade negotiator.

Experts say that the leverage Beijing makes through rare earth control is an additional factor that Trump pushes to offer concessions, and is a card that Beijing almost certainly uses.

Beijing agreed to ease the export ban on rare earth metals and magnets to the United States in June, moving on to facilitate the licensing process following a series of negotiations, but little explanation was given for its commitment to accelerate the shipment of critical minerals.

In June, the country’s rare earth exports surged to 7,742 metric tons, up 60% since January 2012, before falling to 5,994.3 metric tons in July, according to data on wind power information.

According to official customs data, exports of China’s rare earth magnets to the United States in June jumped more than seven times from the previous month, with American companies receiving about 353 tons of permanent magnets in June. A similar country-specific breakdown will be released on August 20th.

Another troubling issue in US-China negotiations is Trump’s threat to punish Beijing with additional tariffs on Russian oil purchases.

China is the biggest buyer of Russian oil, followed by India, tariffs doubled on us, reaching 50% last week.

Responding to a question about whether he would consider punishing China for the same reasons, Trump said:

According to the latest customs data, total imports from Russia from China reached the top $106 billion in July, the highest level since March, but fell 7.7% overall this year.

XI called President Vladimir Putin on Friday ahead of the Russian leader with the Russian Ukraine, which is now in its fourth year, meeting with Trump.

Neo Wang, who leads the Chinese economist at Evercore ISI, said the call with Putin was considered “urgent.”

“Both XI and Putin will want to capitalize on their close relationship in negotiations with Trump.