A New China Tariff Deadline Isn’t a Lock. Get Ready, Wall Street.

The list of issues between China and the U.S. is long. Here: containers and ships at the port in Qingdao in China. (AFP via Getty Images)

The U.S.-China detente could be in for another test. While most investors and trade experts expect an extension of the Aug. 12 deadline for tariffs on China to rise an additional 34%, that hasn’t been confirmed—paving the way for potential market volatility.

After a meeting last week in Stockholm between Treasury Secretary Scott Bessent, U.S. Trade Representative Jamieson Greer, and their Chinese counterparts, the Chinese delegation said the two sides had agreed to a 90-day extension. But U.S. officials said President Donald Trump has yet to approve that extension.

While U.S. officials say talks with the Chinese have been constructive and continue to indicate they expect an extension, Trump has not yet weighed in—and it was not brought up in an interview he had on CNBC Tuesday morning. A White House spokesman said he had nothing to add to Trump’s comments on the issue.

In an e-mailed statement, Chinese embassy spokesman Liu Pengyu told Barron’s that based on the consensus reached in Stockholm, “both sides will continue pushing for the continued extension by 90 days of the pause” on the 34% tariffs the U.S. threatened on China and the 24% tariffs China threatened, along with other countermeasures.

Even after the U.S. outlined its tariffs on a broad swath of countries, mostly set to go into effect Aug. 7, it’s a reminder that there is still a lot of uncertainty—especially with China, one of the most important trading relationships for the global economy.

The list of issues between the two geopolitical rivals is long, including export restrictions of critical minerals the U.S. uses for industrial and defense purposes, and restrictions on China’s access to advanced technology.

While China has granted licenses for U.S. access to critical magnets for industrial and auto uses, The Wall Street Journal reported that it is still restricting access to minerals used for defense purposes. Trade lawyers note that could be a sticking point for the extension.

“Part of the challenge is seeing so many issues beyond trade blur into what is happening. That makes it hard to know what triggers could lead to heightened tariffs,” said Ryan Majerus, a partner at King & Spalding, who previously worked in the Commerce Department and Office of the U.S. Trade Representative.

One of those non-trade issues complicating discussions is Trump’s efforts to push Russian leader Vladimir Putin to commit to a credible cease-fire with Ukraine by Aug. 7. If not, Trump has threatened sweeping secondary sanctions or tariffs on countries that buy Russian oil and other goods. Top of that list are China and India.

Trump has already hit back at India, imposing 25% tariffs, and on Tuesday he said he was “going to raise that substantially over the next 24 hours,” citing their Russian oil purchases.

Unclear is Trump’s approach to China, especially as the countries have enjoyed a fragile detente in hopes of an in-person meeting this fall between Trump and Chinese leader Xi Jinping. Trump has frequently talked about wanting to meet with Xi.

In his CNBC appearance, Trump stressed his good relationship with the Chinese leader but said that Xi, not he, had called for a meeting—and that he would have a meeting by year-end if the two sides make a deal.

The Chinese spokesman didn’t comment on the meeting requests but said it hopes the U.S. can work with China “to continue adhering to the important consensus reached by the two heads of state during their phone talks.”

“Right now the U.S.-China talks are held hostage by the U.S.-Russia talks, so it isn’t clear that President Donald Trump will approve the U.S.-China trade truce extension immediately,” said Matt Gertken, chief geopolitical strategist for BCA Research, via email. “Even if the U.S.-China trade truce is extended, it could fall apart right away due to strategic tensions over Russia and Ukraine.”

If Trump follows through with the threat to punish China for its Russian purchases, markets could be in for another bout of volatility like when the two sides ratcheted up tariffs to levels that paralyzed trade, Gertken said.

Gertken expects Russia to eventually commit to some sort of diplomatic process that will let Trump de-escalate, but the interim negative news and brinkmanship could increase friction with China and hit markets, raising energy prices, as well as prices for goods. “That would create a two-punch combination for risky assets, as it would come with a drop in sentiment,” Gertken said.

Other geopolitical consultants are stressing to clients that the tariff risk isn’t one and done because so much is being blurred into the trade discussion.

“The White House has imposed tariffs a dozen times in the last six months and if they expand it to any disturbance—India-Pakistan, Ukraine-Russia, Brazil and [former President Jair] Bolsonaro. There will be no limit and no end. That is only just now starting to resonate with investors,” said Henrietta Treyz, head of economic policy research at Veda Partners.

Write to Reshma Kapadia at reshma.kapadia@barrons.com