US, China to resume tariff talks in effort to extend truce
China is facing an August 12 deadline to reach a durable tariff agreement with President Donald Trump's administration, after Beijing and Washington reached a preliminary deal in June to end weeks of escalating tit-for-tat tariffs.
Without an agreement, global supply chains could face renewed turmoil from duties exceeding 100%.
The Stockholm talks, led by US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, take place a day after European Commission President Ursula von der Leyen meets Trump at his golf course in Scotland to try to clinch a deal that would likely see a 15% baseline tariff on most EU goods.
Trade analysts on both sides of the Pacific say the discussions in the Swedish capital are unlikely to produce any breakthroughs but could prevent further escalation and help create conditions for Trump and Chinese President Xi Jinping to meet later this year.
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 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.
'Stockholm will be the first meaningful round of US-China trade talks,' said Bo Zhengyuan, Shanghai-based partner at China consultancy firm Plenum.
Trump has been successful in pressuring some other trading partners, including Japan, Vietnam and the Philippines, into deals accepting higher US tariffs of 15% to 20%.
He said there was a 50-50 chance that the US and the 27-member European Union could also reach a framework trade pact, adding that Brussels wanted to 'make a deal very badly'.
Two of Trump's top trade officials, Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer, will attend the Scotland talks and then travel to Stockholm.
Analysts say the US-China negotiations are far more complex and will require more time. China's grip on the global market for rare earth minerals and magnets, used in everything from military hardware to car windshield wiper motors, has proved to be an effective leverage point on US industries.
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 whether to visit China in a landmark trip to address trade and security tensions. A new flare-up of tariffs and export controls would likely derail any plans for a meeting with Xi.
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US trade diplomacy
Pakistan, under the 'euphoria of triumph', swiftly walked out, having made a deal with the United States with 19 percent US tariffs on its exports. This drew comparison with India — still embroiled in tariff conflict with US with no settlement in sight. Nevertheless, the comparison is not realistic. India got on the wrong side of Donald Trump who reprimanded it for supplying cheaper procured Russian oil to Europe at a high premium, thereby fuelling the Ukraine war. Additionally, India's engagement with BRICS, as its founding member, is looked upon with suspicion by the Trump administration. Whereas, historically, India's case stems from longstanding trade tensions: data localization rules, price caps on pharmaceuticals, and high tariffs on US imports — specially on its automotive industry. Pakistan, in contrast, has no such baggage. It does not restrict American tech firms, nor does it block market access. The flat 19 percent US tariffs are being quietly absorbed by Pakistan's export sector but should not be overlooked by policymakers. While this is a reduction from the earlier proposed 29 percent tariffs — ironically for Pakistan's struggling exporters, the difference between 19 percent and 29 percent is merely academic when compared to the 0-8 percent range they previously operated under — especially for core products like textiles, surgical goods, and sports equipment. The country's exporters, particularly small and medium enterprises (SMEs), operate on razor-thin margins. With rising energy costs at home and political instability feeding currency volatility and a country fighting for every export dollar, this is not an encouraging development. These blanket tariffs erode Pakistan's competitiveness, particularly in labour-intensive and price-sensitive sectors such as textiles, surgical instruments, sports goods, and leather products. These sectors are economic engines and critical to employment, particularly in vulnerable regions across Punjab, KP, and Sindh. Pakistan uncompetitiveness could reroute US buyers toward countries like Bangladesh, Jordan, Vietnam, or even Mexico, many of whom enjoy more favourable trade terms through Free Trade Agreements (FTAs) or GSP+ schemes. To preserve a healthy trade relationship and support Pakistan's economic stability, an optimal and friendly tariff would fall between 0 percent and 5 percent, at least for priority export categories like textiles and garments, surgical instruments and medical devices, sports goods, leather products and IT services (via digital trade facilitation). This would mirror the preferential access already offered to other developing or strategic allies. The US has mechanisms for this — whether through restoring GSP benefits, or negotiating product-specific concessions under bilateral economic frameworks. Pakistan has long been a strategic ally during the Cold War and the war on terror; more recently, the countries have made efforts aimed at obtaining regional stabilization. That alliance should be reflected in trade policy, not just security dialogue. This 19 percent tariff may seem like a routine trade adjustment, but its implications are far-reaching at a time when Pakistan's economy can least afford it. Political goodwill, unless translated into economic terms, quickly turns into irrelevance. It is now a time for proactive trade diplomacy. Copyright Business Recorder, 2025
