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The United States and China, the world’s two largest economies, have extended their trade truce for another 90 days until November 10, 2025, averting a sharp escalation of tariffs. The pause keeps US duties on Chinese goods at 30% (against a threatened 145%) and Chinese tariffs on US shipments at 10% (down from an earlier 125%). This temporary reprieve reflects the complex mix of economics, politics, and strategic leverage shaping bilateral relations.

Tariffs and Negotiation Dynamics

Since his return to office, US President Donald Trump has pursued aggressive tariff measures to reduce America’s $300 billion trade deficit with China (2024), arguing that higher duties encourage domestic production and investment. Beijing retaliated with counter-tariffs and restrictions, sparking a tit-for-tat escalation that threatened global supply chains.

The extension of the truce provides space for negotiations over trade imbalances, unfair practices, national security concerns, and market access. It also underscores the challenges of balancing protectionism with the risks of inflation, uncertainty for businesses, and potential disruption to global economic stability.

China’s Leverage: Rare Earths and Agriculture

Beijing has strategically wielded two levers of influence. First, it controls the global supply chain of rare-earth elements and magnets, crucial for the US auto, aerospace, defence, and semiconductor industries. Second, it has employed its role as a major importer of agricultural commodities as a “trump card.”

US farm exports to China fell sharply from $13.1 billion (Jan–June 2024) to $6.4 billion (Jan–June 2025), continuing a downward trend from the 2022 peak of $40.7 billion. The steepest decline has been in soybean exports, dropping from $17.9 billion (2022) to just $2.5 billion (Jan–June 2025). China has redirected much of its soybean imports—74.7 million tonnes in 2024—to Brazil, Argentina, and Canada, significantly hurting American “corn belt” states and livestock producers reliant on feed crops.

Beyond soybeans, imports of US corn, sorghum, barley, cotton, beef, pork, poultry, and tree nuts such as almonds and pistachios have also contracted. This has created pressure on Trump from politically influential farm states, prompting him to publicly urge Beijing to expand soybean purchases.

Impact on the US and India

While American agricultural exports to China have fallen by 51.3% (Jan–June 2025 over 2024), those to India have surged 49.1% in the same period. India has emerged as the largest market for US tree nuts, importing over $1.1 billion in 2024, with a 42.8% year-on-year rise in early 2025. At the same time, the US has become India’s largest buyer of seafood, with frozen shrimp exports worth $1.9 billion in 2024–25.

This divergence highlights India’s growing importance in US agricultural trade, even as tariff disputes persist—Washington recently doubled duties on Indian imports to 50%, citing penalties linked to Russian oil purchases.

Broader Strategic Context

The US–China trade confrontation extends beyond tariffs and agriculture. Issues under negotiation include curbs on semiconductor exports, the role of Chinese platforms like TikTok, and energy security linked to Russian oil purchases. Beijing emphasizes “win-win cooperation,” while Washington continues to pursue coercive tools to address trade imbalances and safeguard national security.

Conclusion

The current trade truce reflects a fragile pause rather than resolution. China’s use of agriculture and rare earths as instruments of economic statecraft illustrates the growing intertwining of trade, technology, and geopolitics. For the US, balancing domestic political pressures from farmers and industries with long-term strategic objectives remains a challenge. For India, the shifting trade landscape offers both opportunities for greater market access and risks of tariff retaliation, underlining the complexity of navigating major power rivalries.