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

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. The agriculture working group and the comments on U.S. 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. The statements also leave the truce open to a further extension decision by year-end, so headlines from high-level contacts in coming months could move sentiment either way. --- Earlier: China may let Alibaba, ByteDance buy new Nvidia chips, The Information reports --- Beijing and Washington have bought themselves time on trade until January 2027 and built a new council to try to turn the truce into lasting tariff cuts. Summary: China and the U.S. agreed to establish a China-U.S. 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. 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. 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. China's Commerce Ministry also said it will review applications from financial institutions of all countries, including those with U.S. capital, and that it wants a fair, transparent and stable environment for Chinese financial institutions in the U.S. The two sides agreed to set up a communication channel for AI incidents and to ke