US and China Set for Key Trade Talks in Stockholm Ahead of Anticipated Trump-Xi Summit

WASHINGTON (AP) — U.S. and Chinese officials are meeting in Stockholm, likely to maintain current tariff levels. This discussion aims to pave the way for a potential leaders’ meeting later this year, as analysts suggest.

On Monday, Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng will hold their third round of talks this year. This comes about four months after President Donald Trump’s significant tariff proposals, which raised import taxes on Chinese goods to as much as 145%.

Trump recently stated, “We have the confines of a deal with China.” Bessent noted that after talks in Geneva and London, the two nations are in a “status quo.” Right now, the U.S. imposes a 30% tax on imports from China, while China responds with a 10% tariff on American goods. Last year, the U.S. faced a trade deficit of $295.5 billion with China, and the goal is to find a balance that allows more American exports to China.

The Chinese embassy expressed hopes for increased cooperation from these talks. As both sides prepare for a possible summit between Trump and Chinese leader Xi Jinping, Stockholm’s discussions might clarify the timeline and details for that meeting.

Wendy Cutler, a former U.S. trade negotiator, remarked that this meeting is crucial in setting up a future meeting between Trump and Xi. She emphasized that Beijing will likely push for thorough preparations before agreeing to a summit.

In Stockholm, discussions are expected to address key economic issues, like China’s industrial overcapacity and regulations on chemicals related to fentanyl. Both sides aim to resolve these “major irritants” before a leaders’ meeting.

Sean Stein, president of the U.S.-China Business Council, highlighted that businesses are eager to see how the discussions are framed. They’re also looking for hints about the leaders’ summit since any significant deal will depend on the presidents’ relationship.

### Fentanyl Tariffs in Focus

China aims to have a 20% fentanyl-related tariff lifted, imposed by Trump earlier this year. This trade dispute began over fentanyl, as Trump linked tariffs to China’s failure to control chemicals used in the drug’s production. China retaliated with tariffs on various American products, including beef and natural gas.

While both sides have eased some of the harsh tariffs, the 20% fentanyl tariff remains, along with a 10% baseline tariff on U.S. goods. The U.S. claims China hasn’t done enough to regulate these chemicals, while China argues that the issue lies within the U.S. itself. Recently, China acted by placing more controls on certain fentanyl ingredients, signaling a willingness to cooperate.

Gabriel Wildau, a managing director at Teneo, shared that he doubts tariffs will be lifted in Stockholm but that some relief could be part of a broader deal later on.

### China’s Trade Challenges

China’s industrial overcapacity still poses challenges for the U.S. and EU. America’s trade deficit with China peaked at $418 billion in 2018 but has since decreased. However, China continues to find new markets and maintains a sizable global trade surplus. As China expands its electric vehicle manufacturing, it raises concerns for industries in the U.S., Europe, and elsewhere.

Chinese Premier Li Qiang acknowledged the issue during a meeting with European officials and noted the need for balance in global production.

Bessent mentioned that the Stockholm talks might also cover China’s oil purchasing habits, but concessions could be needed from the U.S. in return. Some experts warn that any concessions could face political resistance in Washington.

The discussions in Stockholm are setting the stage for a trade agreement focused on Chinese commitments to purchase U.S. goods. Experts predict a limited agreement, possibly centered around the fentanyl issue, rather than a grand deal.

This meeting offers an essential opportunity to address long-standing trade frustrations and could lead to future cooperation between these major economies.



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