Top US and Chinese economic officials will resume talks in Stockholm to try to tackle longstanding economic disputes at the centre of a trade war between the world’s top two economies, aiming to extend a truce by three months and keeping sharply higher tariffs at bay.
China is facing an August 12 deadline to reach a durable tariff agreement with President Donald Trump’s administration, after Beijing and Washington reached preliminary deals in May and June to end weeks of escalating tit-for-tat tariffs and a cut-off of rare earth minerals.
Without an agreement, global supply chains could face renewed turmoil from US duties snapping back to triple-digit levels that would amount to a bilateral trade embargo.
The Stockholm talks come hot on the heels of Trump’s biggest trade deal yet with the European Union on Sunday for a 15 per cent tariff on most EU goods exports to the US, including autos. The bloc will also buy $US750 billion worth of American energy and make $US600 billion worth of US investments in coming years.
No similar breakthrough is expected in the US-China talks but trade analysts said that another 90-day extension of a tariff and export control truce struck in mid-May was likely.
An extension of that length would prevent further escalation and facilitate planning for a potential meeting between Trump and Chinese President Xi Jinping in late October or early November.
A US Treasury spokesperson declined comment on a South China Morning Post report quoting unnamed sources as saying the two sides would refrain from introducing new tariffs or other steps that could escalate the trade war for another 90 days.
Trump’s administration is poised to impose new sectoral tariffs that will impact China within weeks, including on semiconductors, pharmaceuticals, ship-to-shore cranes and other products.
“We’re very close to a deal with China. We really sort of made a deal with China, but we’ll see how that goes,” Trump told reporters before European Commission President Ursula von der Leyen struck their tariff deal.
Previous US-China trade talks in Geneva and London in May and June focused on bringing US and Chinese retaliatory tariffs down from triple-digit levels and restoring the flow of rare earth minerals halted by China and Nvidia’s H20 AI chips and other goods halted by the United States.
So far, the talks have not delved into broader economic issues. They include US complaints that China’s state-led, export-driven model is flooding world markets with cheap goods, and Beijing’s complaints that US national security export controls on tech goods seek to stunt Chinese growth.
“Geneva and London were really just about trying to get the relationship back on track so that they could, at some point, actually negotiate about the issues which animate the disagreement between the countries in the first place,” said Scott Kennedy, a China economics expert at the Center for Strategic and International Studies in Washington.
“I’d be surprised if there is an early harvest on some of these things but an extension of the ceasefire for another 90 days seems to be the most likely outcome.”
US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng will lead the delegations in Stockholm. Bessent has already flagged a deadline extension and has said he wants China to rebalance its economy away from exports to more domestic consumption – a decades-long goal for US policymakers.
In the background of the talks is speculation about a possible meeting between Trump and Xi in late October.
Trump has said he will decide soon on a landmark trip to China, and a new flare-up of tariffs and export controls would likely derail planning.
Australian Associated Press is the beating heart of Australian news. AAP is Australia’s only independent national newswire and has been delivering accurate, reliable and fast news content to the media industry, government and corporate sector for 85 years. We keep Australia informed.
