US-China Extend 90-Day Tariff Truce Amid Trade Uncertainty

The United States and China have extended their tariff truce for another 90 days, a move signed by President Trump that delays significant tariff hikes and preserves existing rates on key imports, which has stabilized the yuan around 7.19 per dollar. This extension offers relief to exporters and retailers ahead of the holiday season and reflects ongoing negotiations, including agreements where companies like Nvidia and AMD will share part of their China revenues with the US in exchange for market access. Despite the truce, tensions and uncertainties remain, particularly regarding tariffs related to fentanyl and issues around chip export policies, with expectations of a Trump-Xi summit in Beijing to further stabilize relations. The People’s Bank of China has aimed to keep the yuan stable amidst concerns over deflation and weak consumer and producer prices, while new government rules seek to reduce private sector competition and stabilize the economy. Market participants continue to watch for upcoming US consumer price index data and China’s credit growth figures for indications of broader economic health and potential changes in Federal Reserve policy. Overall, while the truce extension reduces immediate trade war risks, underlying challenges and structural shifts toward decoupling between the two economies persist.