U.S. and China Set to Reopen Tariff Negotiations on Monday: Aiming for Extended Trade Truce

Senior U.S. and Chinese officials are meeting soon in Stockholm to discuss pressing economic disputes that have been at the heart of their ongoing trade war. This crucial meeting aims to extend the truce that currently helps keep severe tariffs at bay.

China is racing against a deadline on August 12 to reach an agreement that could prevent tariffs from skyrocketing. The talks come after a preliminary deal was made in June, but both sides still face complicated issues.

If an agreement isn’t reached, global supply chains might face severe disruptions. Some tariffs could exceed 100%, making everyday goods more expensive.

Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are leading these negotiations. Observers are skeptical about immediate breakthroughs, but they see these discussions as pivotal. They might set the stage for a future meeting between President Trump and President Xi Jinping.

Previous talks earlier this year mainly focused on reducing tariffs and resuming the trading of vital resources like rare earth minerals. These talks, however, haven’t addressed larger economic issues. The U.S. believes China’s state-driven model is dumping cheap goods into global markets. Meanwhile, China opposes U.S. efforts to control tech exports, fearing it could hinder its growth.

Bo Zhengyuan, a partner at a Shanghai consultancy, highlighted the importance of these Stockholm talks, marking them as a significant step in U.S.-China relations.

In light of Trump’s recent success in negotiating preliminary deals with Japan and other countries, analysts emphasize that the U.S.-China discussions are much more intricate. China’s dominance in rare earth minerals gives it considerable leverage in negotiations.

Speculation is building around a potential meeting between Trump and Xi later in the year. Trump hinted he might visit China, but further tariff escalations could thwart those plans. Wendy Cutler from the Asia Society Policy Institute stated that the Stockholm meeting could help lay the groundwork for this visit.

Bessent aims to extend the August 12 deadline to avoid tariffs skyrocketing to 145% on U.S. goods and 125% on Chinese goods. China is likely to push back, wanting reductions on the current 55% tariffs impacting most goods.

Additionally, high-tech export controls will be a key point of discussion. Beijing argues that easing these restrictions could help reduce the U.S. trade deficit, which reached $295.5 billion in 2024.

China currently faces a range of tariffs, including a 20% levy concerning the fentanyl crisis and various other duties imposed during Trump’s presidency.

Bessent will also advocate for China to shift its focus from exports to boosting domestic consumption. This transformation is seen as crucial for China’s economic future. Michael Froman, a former U.S. trade representative, noted that achieving such a shift has been a long-standing goal for U.S. policymakers.

In the broader context, these discussions represent a critical moment in international trade. As countries navigate the complexities brought on by supply chain disruptions and rising protectionism, the outcomes of these talks could shape economic relations for years to come.

For more in-depth insights into U.S.-China trade relations, the Council on Foreign Relations offers valuable resources.

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