The world's two largest economies have spent the past year under a ceasefire in their trade war. The arrangement has lowered tariffs, eased curbs on critical minerals and restarted Chinese purchases of American crops. It also has an expiry date, now Jan. 10, 2027, which makes its terms worth understanding for any business that buys from or sells to either country.

The deal was reached when President Donald Trump and President Xi Jinping met in Busan, South Korea, in October 2025. It followed a tit-for-tat escalation in which mutual tariffs had risen above 100%, Reuters reported. Washington calls it the Busan Agreement. Beijing's Ministry of Commerce refers to it as the Kuala Lumpur economic and trade arrangement, according to China Daily.

The terms were spread across several documents. When the deal was announced, Supply Chain Dive reported that official documentation had yet to be released; the details later came from a White House fact sheet and executive orders, and China's commerce ministry had not confirmed the farm purchase figures. Both governments said the provisions would be renegotiated annually.

The Main Terms

On the US side, according to Supply Chain Dive's summary of the deal:

• The fentanyl-related tariff on Chinese imports was cut from 20% to 10%, effective Nov. 10, 2025.
• A pause on higher reciprocal tariffs on Chinese goods was extended by a year.
• A Section 301 investigation into China's maritime and logistics industries was suspended for a year, along with fees on China-linked ships at US ports.
• A September 2025 rule restricting exports to companies at least 50% owned by entities deemed potential national security risks was suspended.

On China's side, Beijing paused for one year the rare earth export controls it had announced in October 2025 and agreed to resume issuing export licenses. It suspended retaliatory tariffs and other countermeasures until Dec. 31, 2026, and agreed to tighten controls on chemicals used to make fentanyl. The White House said China would buy 12 million metric tons of US soybeans in the following two months and 25 million tons a year for three years.

How It Has Changed

The truce has already outlived part of its own foundation. Both the fentanyl and reciprocal tariffs relied on the International Emergency Economic Powers Act, which the US Supreme Court ruled in February 2026 does not authorize tariffs, according to law firm Perkins Coie. Since July 24, Chinese goods have faced a 12.5% Section 301 duty imposed on 60 economies, on top of earlier Section 301 tariffs, according to logistics platform Tradlinx.

In September, negotiators extended the deal. After talks with Vice Premier He Lifeng, Treasury Secretary Scott Bessent said on Sept. 23 that the truce, due to lapse on Nov. 10, would run until Jan. 10, PTI reported. China's commerce ministry said the sides also agreed to cut tariffs on about US$30 billion of each other's goods, with roughly 90% of covered products moving to most-favored-nation rates, and to set up a Board of Trade and an investment board, China Daily reported.

Compliance has been mixed. Bessent said in September that China was meeting its 2026 soybean commitment but was a little behind schedule on about $17 billion of other agricultural commitments, Supply Chain Dive reported. Rare earth supplies also remain a point of friction. A Council on Foreign Relations analysis cited by the Northeast Times said Beijing had continued to restrict supplies even after the Busan deal. Chinese customs data show rare earth exports of 39,441 metric tons in the first eight months of 2026, down 11.1% from a year earlier, according to Shanghai Metals Market.

What Happens Next

Three outcomes are possible before Jan. 10: a broader agreement, another short extension, or a lapse. Bessent said in September that a larger package could be agreed by January or the current deal rolled over again, PTI reported.

Many of the Busan measures, including China's pause on rare earth controls and the US suspension of its port-fee investigation, were agreed as time-limited suspensions rather than permanent changes. China's suspension of its retaliatory tariffs was set to run until Dec. 31, 2026, according to Supply Chain Dive. A lapse would not, however, revive the emergency-powers tariffs, which the Supreme Court has struck down.

The next checkpoint is a Trump visit to Shenzhen planned for November, where he is expected to meet Xi, the South China Morning Post reported, citing unnamed sources. Securing a longer extension is the main priority for both sides, according to the report.

For companies in Asia that sit between the two economies, the truce has provided a year of relative calm. Its short renewal cycle means that calm has to be renegotiated every few months.