US-China trade truce extended to January 10 — why only two months, tariffs intact
At a three-day summit in Washington that began on September 23, 2026, the United States and China agreed to extend their trade truce, known as the Busan Agreement, from its November 10 expiry to January 10, 2027. Treasury Secretary Scott Bessent announced the two-month extension. Tariffs stay put: the average US tariff on Chinese goods is about 36.5 percent and the Chinese average on US goods about 31 percent. The extension is short because the summit produced no agreement on AI, chip export controls or Iran. Bilateral trade fell 29 percent in 2025 and another 14.5 percent in January to July 2026, yet the overall US goods deficit grew
The three lines
- Deal — the Busan Agreement now expires January 10 instead of November 10; no tariff cuts
- Unchanged — US average tariff on China about 36.5%, China on the US about 31%; AI, chips and Iran unresolved
- Paradox — US-China trade fell 29% in 2025, yet the total US goods deficit rose as imports moved to other suppliers
Key questions
- What did the Trump-Xi summit agree
- **One thing: a truce extension, for two months.** | Item | Result | |---|---| | Busan Agreement (trade truce) | expiry moved from November 10 to **January 10, 2027** | | Announced by | Treasury Secretary Scott Bessent | | Tariff cuts | **none** | | AI | discussed, no concrete agreement | | Iran | discussed, no concrete agreement | | Format | state visit by Xi Jinping, arriving September 23 for three days | **CNBC summed it up as spectacle over substance.** Trump personally greeted Xi at Joint Base Andrews — the first time in 11 years a US president has met a foreign leader there. It was the leaders' third in-person meeting in a year.
- Why only two months
- **Because none of the big issues moved.** A long extension requires a list of what each side will give in the meantime. That list was empty. | Issue | US wants | China wants | Status | |---|---|---|---| | Tariffs | smaller deficit | lower tariffs | deadlocked | | Chips and AI | keep export controls | loosen them | no deal | | Rare earths | stable supply | keep as leverage | China controls **90%** of processing | | Iran | China's help pressuring Tehran | — | no deal | **Two months avoids a breakdown without conceding anything.** If the truce lapses, tariffs rise again; if it runs too long, the pressure to negotiate disappears. January 10 is now the next deadline.
- Why has the US deficit not shrunk despite tariffs
- **Americans bought less from China, not less overall.** Figures compiled by Al Jazeera: | Measure | 2024 | 2025 | 2026 | |---|---|---|---| | US-China trade | 584 billion dollars | 415 billion dollars (−29%) | January–July another −14.5% | | US deficit with China | 297 billion dollars | 203 billion dollars | January–July 91 billion dollars | | Total US goods deficit | — | **up 2.8%** | May–July 325 billion dollars (+17.4%) | | China's total exports | — | 3.77 trillion dollars (+6.1%) | — | **The deficit with China fell; the total deficit rose.** US buyers switched suppliers, and China redirected exports to Southeast Asia (+14%) and the EU (+9%). China ran a **1.2 trillion dollar** global trade surplus in 2025. Al Jazeera concluded China is holding up better.
The US-China trade truce gets two more months. Not a single tariff came down. That was the outcome of the three-day Washington summit that began on September 23.
1. What was and was not agreed
| Detail | |
|---|---|
| Agreed | Busan Agreement expiry moved from November 10 to January 10, 2027 |
| Not agreed | tariff cuts, AI and chip export controls, Iran, Taiwan |
| Tariff levels | US on China about 36.5%; China on US about 31% |
| Separate tariff | a new 12.5% US levy on 60 partners, China included, over forced-labour imports |
The Busan Agreement is last year's truce, an 11-month pause in which both sides stopped raising tariffs and suspended some retaliation. Bessent said the two sides had agreed to extend it.
2. Why two months
A long extension needs a list of trades to make in the meantime. This time the list was blank.
| Issue | Obstacle |
|---|---|
| Chips and AI | Washington keeps advanced-chip controls; Beijing wants them eased |
| Rare earths | China holds 90% of processing capacity and keeps it as leverage |
| Iran | the US wants China's help; no deal |
| Tariffs | deficit reduction versus tariff relief — deadlocked |
So, two months. A lapse would raise tariffs and rattle markets; a year-long extension would remove the pressure to negotiate. January 10 is both a new deadline and the next negotiating date. Analyst Yun Sun noted that compared with a year ago, when both sides were escalating tariffs and export controls, the stabilisation itself is striking.
3. The trade war's report card
| Measure | Result | Reading |
|---|---|---|
| US-China trade | −29% in 2025, −14.5% January–July 2026 | down |
| US deficit with China | 297 → 203 billion dollars | down |
| Total US goods deficit | +2.8% in 2025, +17.4% May–July 2026 | up |
| China's total exports | +6.1% in 2025 to 3.77 trillion dollars | up |
| China's export destinations | Southeast Asia +14%, EU +9% | shifted |
Tariffs cut what the US buys from China, not what the US buys. Imports moved to other suppliers and China moved its sales elsewhere. The original goal — a smaller trade deficit — has not been met.
4. What exporters elsewhere should watch
| Item | Link |
|---|---|
| Semiconductors | if US chip controls on China stay, rules on selling memory chips into China stay too — a direct issue for Samsung and SK hynix |
| Supplier switching | US import diversion has helped others: South Korea's exports to the US rose 118% year on year in September 1–20 |
| January 10 | a lapse would shake supply chains that depend on Chinese components |
5. What remains unconfirmed
- Item-level deals on soybeans, Boeing or rare earths could not be confirmed.
- The 12.5% forced-labour tariff's interaction with the truce is unclear.
- Tariff averages cite a July CRS estimate as reported.
- The next marker is the January 10, 2027 expiry.
Sources
- Al Jazeera — Trump welcomes Xi to Washington as US, China agree to extend trade truce
- Al Jazeera — As Xi meets Trump, who's winning their trade war?
- CNBC — Trump, Xi wrap state visit centered on spectacle over substance
- NPR — Trump and Xi strike cordial tone at summit amid underlying tensions
- CNBC — Trump, Xi seek trade stability and deals, but AI, tariffs and Iran loom large