Washington: The United States and China have agreed to extend their trade truce until January 10, 2027, while moving ahead with plans for tariff reductions covering about $60 billion worth of goods traded between the two countries.
The arrangement covers about $30 billion of goods from each side. The United States and China have released lists of non sensitive products that could receive more favourable tariff treatment as part of the agreements reached after US President Donald Trump and Chinese President Xi Jinping met in Washington last week.
The tariff reductions are not yet fully in effect. China's Commerce Ministry said the measures will be implemented after both countries complete their domestic legal procedures.
The agreement is one of the main economic outcomes of Xi's visit to the United States from September 23 to 25. It gives the world's two largest economies more time to negotiate their wider trade relationship and provides businesses with greater certainty while the talks continue.
China's list includes a wide range of US agricultural products. These include corn, wheat, sorghum, meat, dairy products, vegetable oils and meals, as well as fish and seafood. Other products on the list include logs and wood products, cosmetics and medical devices.
The United States has proposed favourable tariff treatment for a range of Chinese consumer goods. These include household appliances, tableware, kitchen products, toys, curtains, electric shavers and holiday decorations.
The US Trade Representative said the products covered by the arrangement are non sensitive goods. The US side said the list could improve market access for about 30 percent of US exports to China.
One important issue remains unresolved. Soybeans, a major US agricultural export to China, are not included in China's tariff reduction list. China has nevertheless resumed large scale purchases of US soybeans under an earlier agreement.
The two countries have also agreed on measures concerning coal. China has agreed to import at least 10 million metric tons of US coal annually in 2027 and 2028. The Chinese government said US coal would supplement its domestic supply while providing revenue and employment for the US coal industry.
The latest arrangements follow the eighth round of US China economic and trade consultations, which were held in New York and Washington from September 20 to 23. The talks produced several agreements that were then taken forward during the Trump Xi summit.
The two countries have operationalised a US China Board of Trade to provide a regular mechanism for discussing trade issues. An agricultural working group will also examine market access and regulatory issues affecting agricultural products. Its first meeting is expected before the end of 2026.
The countries have also agreed to establish a Board of Investment to discuss investment opportunities and barriers. China said it would examine applications from foreign financial services institutions, including those with US capital, to conduct business and establish branches in China.
The two countries have also agreed to establish a dialogue on artificial intelligence to discuss related issues. They will create a communication channel for AI related incidents and hold a follow up dialogue by the end of November.
The trade truce extension is important because the previous arrangement had been due to expire on November 10. Extending it to January 10 gives negotiators additional time to assess existing commitments and discuss unresolved issues.
China's Commerce Ministry said the extension would provide a relatively stable and predictable policy environment for businesses while allowing both sides to continue negotiations.
The latest developments do not amount to a comprehensive settlement of the wider US China trade dispute. Earlier agreements have seen uneven progress, including commitments involving agricultural purchases and other areas of trade.
The two countries continue to have disagreements over trade, technology, investment and other strategic issues. The latest agreements therefore represent a period of continued negotiation and limited economic cooperation rather than an end to the wider rivalry.
For businesses in both countries, the immediate significance is the extension of the trade truce and the identification of specific products that could receive tariff relief. The next major test will be whether the two governments complete their domestic procedures and put the agreed tariff measures into effect.
The two sides have also agreed to continue communication on increasing flights between China and the United States. Both governments are expected to remain engaged in economic and trade talks ahead of the January 10 deadline.
The extension gives Washington and Beijing several more months to work on outstanding issues and determine whether the latest agreements can develop into a longer term framework for their economic relationship.