Trade Tensions on Hold: US, China Extend Tariff Truce with AI Chip Revenue Pact

Extending their tariff ceasefire by 90 days, the United States and China have agreed to postpone significant duty increases until at least November 10, 2025. Should discussions failed, American taxes on Chinese products would have risen to 145 percent, while Beijing's counter tariffs on American goods to 125 percent. Under the extension, 30% on Chinese imports and 10% on US exports—30% on Chinese imports and 10% on US exports—will remain in place as negotiations advance.

Both capitals have indicated that, should significant progress be made, a high-level summit between President Trump and President Xi Jinping might come later this year. Key agenda items include US demands for China to increase purchases of American soybeans, concerns over China’s export policies and manufacturing overcapacity, and the protection of intellectual property and technology transfers.

In a novel turn, leading American chip manufacturers like Nvidia and AMD have agreed to send 15% of their AI-chip income earned in China straight to the US Treasury—a one-off arrangement aimed to sweeten the agreement. Although the extension gives both sides much-needed breathing room to negotiate a larger accord, experts warn that profound conflicts still exist and a final resolution is by no means guaranteed.