A triple-digit percentage increase in tariffs would have severely crimped trade between the two countries ahead of the crucial holiday season.
Oil prices edged higher in early trading on Tuesday after the U.S. and China agreed to extend a tariff truce for a further 90 days, easing some concerns about demand in the world’s largest oil consumers.
U.S. President Donald Trump took to his Truth Social platform on Monday to reveal that he has signed the executive order for the extension, and that “all other elements of the Agreement will remain the same.” China’s commerce ministry soon followed suit to declare that Beijing was also pausing its retaliatory tariffs.
Benchmark Brent crude prices advanced 0.4% to $66.92 at 02.09 a.m. ET while U.S. West Texas Intermediate crude rose 0.4% to $64.20. Retail sentiment on Stocktwits about the United States Oil Fund (USO) was in the ‘bullish’ territory at the time of writing.
The effective U.S. tariffs on foreign goods have already reached their highest since the Great Depression. A triple-digit percentage increase in tariffs would have severely crimped trade between the two countries ahead of the crucial holiday season.
“Securing an agreement on fentanyl that leads to a reduction in U.S. tariffs and a rollback of China’s retaliatory measures is acutely needed to restart U.S. agriculture and energy exports,” Sean Stein, president of the U.S.-China Business Council, said, according to an Associated Press report.
Investor attention will now shift to crucial U.S. data due this week. On Tuesday, the U.S. Labor Department will reveal the consumer price inflation data, several days after Trump fired the head of the Bureau of Labor Statistics following sharp revisions in U.S. jobs data.
According to a Reuters poll of economists, the CPI likely rose 0.2% last month, compared with a 0.3% increase in June. Markets will also eye jobless claims data, expected later this week.
Separately, the prospects of a ceasefire in Ukraine and easing of sanctions on Russia have capped gains of crude oil prices. Trump is expected to meet Russian President Vladimir Putin on Aug. 15 in Alaska to discuss an end to the three-year-old conflict.
An easing of sanctions on Russian oil could put further pressure on the oil market amid continued output hikes by OPEC+.
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