U.S. and China reignite trade talks in Stockholm, may set stage for Trump, Xi meeting
U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng were meeting at the offices of Sweden's prime minister for two days of talks that Bessent has said will likely lead to an extension of current tariff levels. But other possible outcomes will be scrutinized.
Analysts say the talks could set the stage for a possible meeting between U.S. President Donald Trump and Chinese President Xi Jinping later this year.
The U.S.-China trade talks are the third this year, nearly four months after Trump upended global trade with his sweeping tariff proposals, including an import tax that shot up to 145 per cent on Chinese goods. China retaliated with tariffs reaching 125 per cent against U.S. goods, sending global financial markets into a temporary tailspin.
'We've pulled back from the brink': Investors cheer U.S.-China tariff truce but cautious over a final deal
The Stockholm meeting, following similar talks in Geneva and London, is set to extend a 90-day pause on those tariffs. During the pause, U.S. tariffs have been lowered to 30 per cent on Chinese goods, and China set a 10 per cent tariff on U.S. products.
The Trump administration, fresh off a deal on tariffs with the European Union, wants to reduce a trade deficit of US$904-billion overall last year, including a nearly US$300-billion trade deficit with China.
China's Commerce Ministry said last week that the 'consultations' would raise shared concerns through the principles of 'mutual respect, peaceful coexistence and win-win co-operation.'
The talks with the Chinese are part of a flurry of U.S. trade negotiations set off by Trump's arm-twisting 'Liberation Day' tariffs against dozens of countries. Since then, some talks have borne fruit in reaching deals. Others have not.
Without an extension by Aug. 12, the tit-for-tat U.S.-China tariffs could snap back to the triple-digit levels seen before the 90-day pause reached in Geneva. Many other countries – including some developing ones that depend on exports to the U.S. – face a Friday deadline, as the Trump administration has said letters will go out beforehand with set rates.
Critics say Trump's tariffs penalize Americans by forcing U.S. importers to shoulder the costs or pass them to consumers through higher prices.
Companies are passing rising tariff costs on to U.S. consumers, real-time pricing data show
On Friday, Trump told reporters 'we have the confines of a deal with China' – just two days after Bessent told MSNBC that a 'status quo' had been reached between the two sides.
While the Chinese side has offered little guidance about the specifics of its aims in Stockholm, Bessent has suggested that the situation has stabilized to the point that China and the U.S. can start looking toward longer-term balance between their economies.
For years, since China vaulted into the global trading system about two decades ago, the United States has sought to press leaders in Beijing to encourage more consumption in China and wrest greater market access to foreign-made – including American – goods.
Other sticking points in the relationship include overcapacity in China – by far the world's largest manufacturer – and concerns about whether Beijing is doing enough to control chemicals used to make fentanyl, analysts say.
In Stockholm, the Chinese will likely demand the removal of a 20 per cent fentanyl-related tariff that Trump imposed earlier this year, said Sun Yun, director of the China program at the Washington-based Stimson Center.
China's economy grows steadily despite Trump trade-war chaos
Experts say long-term progress in the U.S.-China trade relationship will hinge on structural changes. Those include increased manufacturing in the United States, which is part of Trump's ambition. On the Chinese side, that could involve a reduction of excess Chinese production in many industries, including electric vehicles and steel, and increased Chinese consumer spending to ease imbalances in China's export-driven economy.
Sean Stein, president of the U.S.-China Business Council, said Stockholm could be the first real opportunity for the two governments to address structural reform issues, including market access in China for U.S. companies.
Businesses will read how the two sides characterize the outcome in Stockholm and look for clues about a possible Trump-Xi summit, because any real deal will depend on the two presidents meeting, Stein said.
Bessent has also said the Stockholm talks could address Chinese purchases of Russian and Iranian oil.
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Ottawa Citizen
21 minutes ago
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