Trump Extends U.S.-China Trade Truce, Easing Market Tensions

President Donald Trump has extended the U.S.-China trade truce by 90 days beyond 12 August 2025, providing a temporary shield against escalating tariffs that could disrupt global markets. During a press conference, he stated, "We'll see what happens," while commending China’s cooperative stance, noting, "They've been dealing quite nicely." This executive order follows multiple rounds of negotiations, with both nations reporting progress in defusing trade tensions. The decision delays the reimposition of substantial tariffs, which had previously threatened to reach triple-digit levels, offering a breather for Singapore’s capital markets. Sectors such as technology and commodities, sensitive to U.S.-China trade dynamics, may experience reduced volatility, giving traders time to reassess strategies. The extension underscores a cautious optimism, with Trump hinting at a potential meeting with Chinese leader Xi Jinping before the year’s end, which could further stabilise trade relations.

The truce extension builds on productive discussions, with Trump’s team and Chinese negotiators expressing confidence in ongoing talks. "They've been dealing quite nicely," Trump reiterated, reflecting a positive tone from recent negotiations in Stockholm and earlier meetings in Geneva. These talks have focused on reducing tariffs from their peak levels—125% for U.S. imports from China and 145% for Chinese tariffs on U.S. goods—down to a baseline of 10% and 30%, respectively, during the initial 90-day truce in May 2025. The extension maintains this lower tariff structure, averting a return to higher rates that could strain global supply chains. For Singapore, a hub for trade and finance, this development mitigates risks to export-driven sectors. However, the absence of a long-term deal keeps markets on edge, as unresolved issues like China’s rare earth exports and U.S. fentanyl-related tariffs remain points of contention. Verified reports indicate Trump urged China to quadruple soybean purchases, a demand that could influence agricultural markets if pursued.

For Singapore’s capital markets, the truce extension offers a window to navigate trade uncertainties. The suspension of high tariffs reduces immediate price pressures on goods flowing through regional supply chains, benefiting industries like electronics, shipping, and commodities. The potential for a Trump-Xi summit by year-end adds further hope for stability, as a broader agreement could ease global trade frictions. However, Trump’s open-ended stance—"We'll see what happens"—signals that traders must remain vigilant. Singapore brokers may see increased activity in tech and commodity indices, as investors adjust to the prolonged detente. The truce’s temporary nature, combined with ongoing disputes over rare earths and fentanyl tariffs, suggests that market stability is not guaranteed. Traders should monitor developments closely, as a failure to secure a lasting deal could reignite tensions, impacting global demand for commodities like oil and copper, which are critical to Singapore’s markets. How will this extension shape trading strategies in the months ahead?