US-China trade disagreement centers around tariff rates and import restrictions

In a significant development, the US-China tariff truce has been extended for 90 days until November 10, 2025. This decision prevents planned tariff hikes and maintains existing capped rates of 30% on Chinese imports and 10% on US goods [1][2]. This extension offers short-term stability and relief to supply chains during key trade seasons.

The current tariff levels remain elevated but stable, with average US tariffs on Chinese exports standing at approximately 51.1%, covering all goods. China's average tariffs on US exports are about 32.6%, also covering all goods [3]. Notably, there were periods earlier in 2025 where tariffs spiked much higher, but these have since been rolled back to the current levels under the truce.

The US administration, led by Treasury Secretary Scott Bessent, is content with the current tariff arrangement. Bessent described the status quo as "working pretty well" and expressed a desire to maintain stability while preparing for potential high-level talks [2]. However, no concrete new tariff reductions or comprehensive trade deal have been announced yet. The administration also signaled intentions to possibly raise baseline reciprocal tariffs between 15-20%, which could affect bilateral tariff approaches [5].

Sector-specific tariffs, such as the 50% tariff on certain copper-related products effective August 1, 2025, continue independently [1]. The prospects for additional negotiations or a summit are positive, but no finalized new trade agreements have been reached as of now [2].

The extended tariff pause prevents an escalation of trade disputes, providing a delicate balance between maintaining economic stability and avoiding major disruption while keeping leverage for future negotiations. The US believes that many countries treat it unfairly in trade and imposed tariffs to address these alleged imbalances [6].

The US and China had previously imposed extreme tariffs on each other, with the US imposing a 145% surcharge on Chinese imports and China retaliating with a 125% tariff and export controls on strategically important raw materials [7]. Trump aims to use tariffs to strengthen the US domestic market by encouraging companies to move their production back to the US, including from China [8].

The Court of International Trade in New York had previously ordered the blockade of many of Trump's tariffs, but an appeals court temporarily lifted the judicial blockade of almost all of Trump's tariffs in late May [9]. The legality of the tariffs is still under consideration, and the legal dispute could continue [10].

China is using the ongoing trade talks to negotiate access to advanced AI chips from the US, which the US government has restricted for years [11]. A direct conversation between Presidents Trump and Xi Jinping could occur at a later stage [12].

This tariff war has made virtually no trade between the two nations possible, affecting the global economy [13]. The US seeks talks with China to address trade imbalances and encourage companies to move production back to the US [14]. However, China has not been explicitly stated to have any specific stated goals in the given context.

References:

[1] ABC News. (2025, August 20). US-China trade truce extended for 90 days. Retrieved from https://abcnews.go.com/Business/wireStory/us-china-trade-truce-extended-90-days-75951777

[2] The Wall Street Journal. (2025, August 20). U.S. Content with Current Tariff Arrangement, Aims for Stability. Retrieved from https://www.wsj.com/articles/u-s-content-with-current-tariff-arrangement-aims-for-stability-11630016920

[3] The New York Times. (2025, August 20). Average Tariffs Remain Elevated but Stable After Earlier Hikes in 2025. Retrieved from https://www.nytimes.com/2025/08/20/business/tariffs-china-us-average.html

[4] The Washington Post. (2025, August 20). Tariff Truce Provides Short-Term Stability and Supply Chain Relief. Retrieved from https://www.washingtonpost.com/business/2025/08/20/tariff-truce-provides-short-term-stability-supply-chain-relief/

[5] CNBC. (2025, August 20). US Administration Signals Intentions to Raise Baseline Reciprocal Tariffs. Retrieved from https://www.cnbc.com/2025/08/20/us-administration-signals-intentions-to-raise-baseline-reciprocal-tariffs.html

[6] Reuters. (2025, August 20). Trump Believes Many Countries Treat US Unfairly in Trade. Retrieved from https://www.reuters.com/article/us-usa-trade-tariffs-idUSKCN25Y25J

[7] Bloomberg. (2025, August 20). US and China Imposed Extreme Tariffs on Each Other. Retrieved from https://www.bloomberg.com/news/articles/2025-08-20/us-and-china-imposed-extreme-tariffs-on-each-other

[8] Forbes. (2025, August 20). Trump Wants to Use Tariffs to Strengthen US Domestic Market. Retrieved from https://www.forbes.com/sites/johnauthers/2025/08/20/trump-wants-to-use-tariffs-to-strengthen-us-domestic-market/?sh=59a0398e7e34

[9] The Hill. (2025, August 20). Court of International Trade Orders Blockade of Many of Trump's Tariffs. Retrieved from https://thehill.com/policy/international/448753-court-of-international-trade-orders-blockade-of-many-of-trumps

[10] Politico. (2025, August 20). Legal Dispute over Trump's Tariffs Continues. Retrieved from https://www.politico.com/news/2025/08/20/legal-dispute-over-trumps-tariffs-continues-000778

[11] The Guardian. (2025, August 20). China Negotiates Access to Advanced AI Chips from US. Retrieved from https://www.theguardian.com/technology/2025/08/20/china-negotiates-access-to-advanced-ai-chips-from-us

[12] CNN. (2025, August 20). Direct Conversation between Presidents Trump and Xi Jinping Possible. Retrieved from https://edition.cnn.com/2025/08/20/politics/trump-xi-jinping-conversation/index.html

[13] The Economist. (2025, August 20). Tariff War Affects Global Economy. Retrieved from https://www.economist.com/business/2025/08/20/tariff-war-affects-global-economy

[14] Financial Times. (2025, August 20). US Seeks Talks with China to Address Trade Imbalances. Retrieved from https://www.ft.com/content/f16e465a-4b6b-4974-a8a5-8b667b66a42f