China and U.S. to set up Trade Council and extend trade truce to January 2027

The useful part

An extended truce lowers the risk of a tariff flare-up in the near term, which tends to support risk sentiment across Asian equities and China-linked currencies. coal point to possible demand for American farm and energy exports, though no volumes or purchase commitments were disclosed. The tariff-reduction framework is the item traders will watch most closely, as its scope and timing are still undefined.

How it works

• The council will first discuss a reciprocal tariff-reduction framework of 300 billion on each side, and will consider other measures to optimize bilateral trade.
• An agriculture working group will be set up under the council, with its first meeting to be held before the end of 2026.
• Trade Council under their bilateral consultation mechanism after the eighth round of economic and trade talks.
• Negotiators have agreed the council's mandate, structure, responsibilities and consultation arrangements, with details to be published later.

What to take from it

The trade truce is to be extended to January 2027, and China's Commerce Ministry said it expects both sides to seek a further extension through high-level contacts before year-end.