The United States and China have extended their tariff truce for an additional 90 days, effective from August 12, 2025, as trade negotiations continue in Stockholm. Both nations have committed to not imposing new tariffs or escalating the trade war during this period. The talks, led by U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, follow earlier discussions in Geneva and London focused on de-escalation.
While no major breakthroughs are expected, the Chinese delegation may raise concerns about U.S. fentanyl-related tariffs, and the U.S. is likely to address China’s industrial overcapacity and technology restrictions. This extension aims to maintain stability in trade relations, with speculation of a potential Trump-Xi summit at APEC in October.
The tariff pause, reducing US tariffs on Chinese goods from 145% to 30% and Chinese tariffs on US goods from 125% to 10%, provides temporary relief for tech companies reliant on Chinese manufacturing and supply chains. Major firms like Apple, which produces 90% of its iPhones in China, benefit from reduced cost pressures, as earlier high tariffs threatened price increases (e.g., a potential $350 hike for high-end iPhones).
Chipmakers like Nvidia, AMD, Broadcom, and Qualcomm, previously impacted by trade restrictions, saw stock gains of 5-8% following the May 2025 tariff reduction announcement, reflecting market optimism. This trend is likely to continue with the extension, stabilizing supply chains for semiconductors and electronics. US-listed Chinese tech firms like Alibaba, JD.com, and Baidu also benefit, as lower tariffs ease export costs and improve market sentiment, potentially boosting their stock valuations.
Despite the pause, a 30% US tariff on Chinese goods remains high (compared to 3% when Trump took office), and the baseline 10% universal tariff on all US imports persists. This ongoing cost burden could still pressure tech firms to raise prices or absorb losses, particularly for consumer electronics like smartphones and PCs. The pause is temporary, and negotiations must yield progress by November 2025 to avoid tariff reinstatement.
China’s $138 billion Innovation Fund, focusing on AI, quantum computing, and 6G, signals a long-term strategy to reduce reliance on US technology. This could challenge US tech dominance, as Chinese firms like Huawei advance in domestic chip production and AI development. The tariff pause may allow China to stabilize its economy while accelerating these investments, potentially widening the technological divide by fostering a parallel ecosystem less dependent on Western supply chains.
High tariffs have already prompted companies like Apple to diversify manufacturing to India, Vietnam, and Thailand, though these countries also face US tariffs. The pause gives firms breathing room to plan further diversification, but the complexity and cost of relocating high-tech manufacturing remain significant barriers. China’s stimulus policies and subsidies for 5G adoption, smart devices, and rural e-commerce aim to bolster domestic demand, potentially offsetting tariff impacts but reinforcing a decoupled tech market.
The tariff pause has spurred optimism in crypto markets, as reduced trade tensions lower macroeconomic uncertainty. Bitcoin surged past $118,571 and Ethereum saw gains following the July 2025 announcement, reflecting their status as risk-on assets during periods of economic stability. The extension is likely to sustain this momentum, encouraging capital inflows into cryptocurrencies as investors perceive lower recession risks. Historically, crypto markets rally when trade hostilities ease, as seen in the 1.25% Bitcoin price increase after the May 2025 tariff cut.
Crypto markets remain sensitive to macroeconomic events. Earlier in 2025, Trump’s tariff hikes caused a sharp crypto market drop, with Bitcoin falling to $74,500 and Ethereum losing over 20%. If negotiations falter by November 2025, renewed tariffs could trigger similar volatility. Tariffs on tech imports, such as GPUs used in Bitcoin mining, increase costs for miners. While the pause mitigates this, persistent high tariffs on Chinese mining equipment (e.g., Bitmain products) could still pressure profitability, particularly for US-based miners.
Bitcoin’s role as a hedge against economic instability may strengthen if tariffs resume and fuel inflation or slow growth. A stronger US dollar, often a byproduct of tariffs, historically exerts downward pressure on Bitcoin prices, but prolonged economic uncertainty could drive institutional adoption of crypto as a safe-haven asset. The tariff war may accelerate Bitcoin’s decoupling from traditional financial markets, as suggested by experts like Robby Greenfield, who see trade volatility pushing crypto toward greater independence.
The tariff pause highlights the need for robust compliance frameworks in crypto, as geopolitical shifts could lead to tighter regulations. Emerging Web3 partnerships (e.g., Sequence and FortePay) underscore the importance of regulatory clarity to sustain growth amid trade uncertainties. The tariff pause is a tactical de-escalation, not a resolution. The US’s 20% fentanyl tariff and restrictions on Chinese tech exports (e.g., rare earths, critical for chip production) signal ongoing strategic competition.
China’s retaliation, including rare earth export curbs, underscores its leverage in critical materials. China’s focus on tech self-reliance and domestic innovation (e.g., AI, 6G) aims to reduce dependence on US technology, potentially creating a bifurcated global tech ecosystem. This divide could lead to incompatible standards, reduced interoperability, and higher costs for global tech firms. The Stockholm talks, involving broader issues like China’s oil purchases from Russia and Iran, indicate that trade is intertwined with geopolitical strategies.
Failure to address these could reignite trade hostilities, deepening the divide. China’s state media portrays the tariff reduction as a negotiating victory, bolstering its domestic narrative of resilience. This could embolden Beijing to maintain a hardline stance in future talks, complicating long-term agreements. The pause has stabilized markets, with the S&P 500 and Nasdaq rallying post-May 2025 announcement. However, the persistent 10% universal tariff and 30% China tariff keep trade costs elevated, potentially reducing global GDP by 0.7-1% if tensions persist.
Other nations, like the EU and ASEAN, are diversifying trade away from the US and China, further fragmenting global markets. This could exacerbate the divide, as countries align with one economic bloc over the other. While the tariff pause offers short-term relief, it does not address underlying structural issues, such as the US’s $1.2 trillion trade deficit or China’s industrial overcapacity. The narrative of a “thawing” trade war may be overstated, as both sides use the pause to reposition strategically.
The US aims to rally allies against China, while Beijing leverages its economic vulnerabilities (e.g., deflation, weak credit demand) to push for concessions. For tech, the pause delays but does not eliminate the risk of supply chain disruptions, and China’s innovation push could challenge US dominance long-term. For crypto, the pause supports short-term gains but leaves markets vulnerable to policy shifts. The divide between the US and China is likely to deepen unless permanent trade agreements emerge, with profound implications for global technology and financial systems.
The 90-day tariff pause stabilizes tech and crypto markets by reducing immediate cost pressures and boosting investor confidence. However, persistent tariffs, unresolved geopolitical tensions, and China’s self-reliance strategy maintain uncertainty. Tech firms face ongoing supply chain challenges, while crypto markets could see both short-term rallies and long-term hedging opportunities. The US-China divide continues to shape a fragmented global economy, with technology and cryptocurrencies at the forefront of this economic and strategic rivalry.
