President Donald Trump extended the tariff suspension with China for 90 days on Monday, citing his “very good relationship” with Chinese President Xi Jinping. But prominent economist Mohamed El-Erian cautioned that short-term relief doesn’t ensure lasting trade calm between the world’s largest economies.

Trump Extends Tariff Pause Until November

Trump signed an executive order keeping the current 10% reciprocal tariffs in place through November 10, avoiding escalation to rates exceeding 100% that previously paralyzed bilateral trade. The president noted negotiations are progressing “quite nicely” in a Truth Social post.

The White House described the extension as “necessary to facilitate ongoing and productive discussion” addressing trade imbalances and unfair practices. Multiple negotiation rounds have focused on trade reciprocity and national security concerns.

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El-Erian Highlights Complex Challenges Ahead

Writing on Substack, El-Erian warned that “aligning their longer-term interests will prove exceptionally challenging.” The economist emphasized that issues extend beyond economics into domestic politics, geopolitics, and national security.

“Turning this pause extension into something more permanent, however, is far from guaranteed,” El-Erian wrote.

“This is an arena where economics profoundly interacts with domestic politics, geopolitics, and national security,” El-Erian wrote. He noted that achieving lasting resolution requires “highly skillful negotiations, likely culminating in a Summit between the two presidents.”

Market Relief Amid Global Trade Concerns

The extension provides immediate relief for both economies. For the U.S., it eliminates “empty shelves for Christmas” risks, while China gains time for internal economic adjustments and export rerouting strategies.

Tech Sector Developments Add Complexity

Separately, Trump expressed openness to NVIDIA Corp ( NVDA ).’s proposal for selling downgraded Blackwell AI chips to China, with performance reductions up to 50%. Advanced Micro Devices, Inc. ( AMD ) and NVIDIA ( NVDA ) face a 15% revenue-sharing requirement on China sales.

China contributed 13% of NVIDIA’s revenue last fiscal year, highlighting the economic stakes involved in ongoing technology restrictions and national security considerations.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.