The framework
The U.S. and China agreed at the G20 finance ministers' meeting in Cape Town to extend the November 2025 tariff truce through the end of Q2 2026. Section 301 tariffs remain at the negotiated 7.5% to 25% band; the 60% fentanyl-linked emergency tariffs introduced in February 2025 stay suspended.
The headline numbers
- Section 301 baseline tariffs: unchanged from November 2025 levels
- Fentanyl-linked emergency tariffs: suspended through June 30, 2026
- Chinese rare-earth export licensing: full reciprocity restored
- U.S. soybean commitments: 12 mt, spread Q2-Q3 2026
The truce was framed as "constructive continuity" by U.S. Treasury Secretary and as "a stable foundation for the next round" by the Chinese Ministry of Commerce.
What it means for trade flows
- Container bookings China-West Coast: +18% YoY in March (Transpacific Stabilization Agreement data)
- U.S. apparel imports: March +4% YoY, first positive print since November 2024
- Auto parts: March +2% YoY, second positive month
The truce is now the consensus base case, not the bull case. — Morgan Stanley, global trade desk
Risk factors
- A new fentanyl-related event that prompts Section 232 invocation
- A U.S. presidential executive order on outbound investment screening
- A Chinese NDRC rare-earth licensing re-tightening
