By Ephraim Agbo
“You don’t make your product in America; however, under the Trump administration, you will pay a tariff — and in some cases, a rather large one,” President Donald Trump warned. “If that tariff isn’t removed by tomorrow at 12:00, we’re putting a 50% increase on top of the tariffs we’ve already put on China — 67% total.”
Today, August 12, 2025, the White House confirmed that the tariff truce with China will be extended another 90 days — postponing an escalation that would have seen U.S. tariffs jump to 145% and China retaliate at 125%.
The extension buys time until early November, but it doesn’t remove the underlying tensions. In fact, for some, it looks less like a peace deal and more like a strategic timeout in an ongoing high-stakes poker game.
Why It Matters Right Now
Markets breathed a sigh of relief. Asian indices surged, Japan’s Nikkei hit record highs, and global investors priced in lower short-term risk. Retailers, especially those stocking for the holiday season, now have a green light to import without eye-watering tariff hikes.
But Wall Street’s muted reaction — the S&P rose just a third of a percent — hints at a deeper truth: investors see this as a pause, not a resolution.
The Small Business Reality Check
While political leaders trade soundbites, small businesses live the consequences.
Take Bedrooms and More, a Seattle family business importing mattress pads from China for over 15 years. The wool comes from Belgium, the cotton from Pakistan, but assembly happens in China.
“When the big tariffs hit, our best-seller vanished from the shelves,” said company president Blake Garfield. “We gambled on a shipment when the pause came, hoping it would arrive in time. Without this extension, we’d have been crushed.”
Finding a U.S. manufacturer? Impossible — the machinery simply doesn’t exist domestically anymore. Alternative countries? No luck — suppliers won’t take calls from small-volume importers.
The Rare-Earths Leverage Problem
Economically, Washington can squeeze with tariffs — but strategically, Beijing holds a trump card: control over rare earths. These minerals are essential for tech, defense, and clean-energy manufacturing. Limiting access is a non-tariff weapon that could bite much harder than customs duties.
Politics and Optics
For the White House, this 90-day pause achieves three things:
- Avoids holiday-season price spikes for U.S. consumers.
- Keeps negotiation channels open.
- Projects control and toughness ahead of the APEC summit in October.
For Beijing, mirroring the pause avoids escalation while protecting domestic industry and leaving retaliation options intact. Both sides can claim a win — at least to their home audiences.
The APEC Wildcard
An invitation is reportedly on the table for Trump and President Xi to meet in October at APEC. If it happens, the summit could:
- Lock in a limited deal on agriculture, tech exports, and targeted exemptions, or
- Serve as a public showdown that resets the clock toward renewed tariff hikes.
Hard Truths (No Spin)
- This pause isn’t peace. The real structural issues — intellectual property rights, subsidies, export controls, and supply-chain concentration — remain unresolved.
- Tariffs hurt unevenly. Large corporations can absorb and reroute supply chains; small businesses can’t.
- Leverage isn’t just about tariffs. Resource dominance, like China’s hold on rare earths, changes the game entirely.
- Trade talks spill into geopolitics. Expect tariff negotiations to intertwine with broader issues like energy alliances and tech restrictions.
Three Possible Paths in 90 Days
- Breakthrough at APEC: Narrow deals bring tariff reductions and market stability.
- Rolling Deadlines: More extensions, modest concessions, ongoing uncertainty.
- Full Breakdown: Tariffs spike, retaliation expands beyond trade into resource controls.
Bottom Line
This extension buys time — and time alone. It’s a calculated pause dressed as a diplomatic victory, but the machinery for a renewed trade clash is still humming quietly in the background.
For consumers, it means holiday prices stay stable for now.
For businesses, it’s another short reprieve in a long, unpredictable game.
For geopolitics, it’s proof that in the U.S.–China relationship, no pause is permanent.
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