Round three - United States and China hold economic talks as trade truce nears end

NZ Herald

a day ago

The Trump Administration has been trying to win concessions from many countries before an August 1 deadline for reimposing tariffs announced in April. Those levies were suspended in order to reach trade deals.
Over the last week, the Trump Administration has announced deals with some of America's biggest trading partners in quick succession.
Last week the US and Japan finally agreed to a deal that included a 15% tariff on Japanese imports and a pledge from Japan to invest US$550 billion in the US.
Today, Trump announced that he had also reached a deal with the European Union, whose economies rely on exports to the US. The deal would put a 15% tariff on many European exports, including cars.
One of the biggest unknowns is what will happen with China, which remains one of America's largest source of imports.
After a tit-for-tat period of tariffs and retaliation, the two nations have come to something of an uneasy truce after talks in Geneva in May, and in London in June.
Today, before he met with European officials, Trump implied that some kind of trade arrangement with China might be close at hand.
'We just struck a deal with Japan as you know, and we're very close to a deal with China,' he said.
This will be the first meeting between the countries without an imminent crisis, like the tariff standoff or China's economically crippling ban on rare earth exports this year.
Trade experts said the list of potential topics for discussion was long, ranging from Trump's push to get China to stop the flow of fentanyl to the US, to America's concerns about its purchases of Russian and Iranian oil, and recent exit bans that have prevented US citizens from leaving China.
US officials appear to be looking forward to more ambitious trade talks in the months to come.
Those could include Chinese purchases of American products, steps to open the Chinese market and, potentially, Chinese investment in the US.
They are also likely seeking to lay the groundwork for a potential meeting between Trump and Xi Jinping, the Chinese leader, this year.
Administration officials are considering a trip to Beijing before a meeting of Asian and Pacific countries in South Korea in October or potentially connecting Trump and Xi on the sidelines of an international meeting.
Michael Pillsbury, a former government official who has advised the Trump Administration on China, said this would be Trump's sixth summit meeting with Xi.
Each of those summits had a minimum of two hours of dialogue, and Trump went prepared with specific dealmaking requests, he said.
'The President feels it's better to deal face to face,' he said.
Trade experts are also wondering whether US technology controls or an agreement to transfer ownership of TikTok may be on the negotiating table.
On CNBC last week, Howard Lutnick, the Secretary of Commerce, said that the US had submitted a proposal to China for transferring ownership of TikTok to American companies, and that the Administration was waiting for the Chinese response.
The topic was 'not officially' part of the trade talks, he said, 'but unofficially, of course'.
Tensions between the US and China started to spiral after Trump announced his 'Liberation Day' tariffs in early April. China was the only country to immediately retaliate, matching Trump's tariffs of 34% with 34% tariffs on American products.
Beijing also set up a licensing system to restrict exports of seven rare earth elements that are processed almost exclusively in China and used in electric cars, smart bombs and other high-tech devices.
Trump then responded by ratcheting up tariffs on Chinese products to a minimum of 145%, which brought much of the trade between the countries to a halt.
The previous rounds of negotiations secured a temporary truce that included China's relaxing its restrictions on shipments of valuable rare earth minerals and magnets needed by US manufacturers.
In return, US officials agreed to roll back limits on exports of US products and technology, including ethane and airplane parts, as well as the proposed visa restrictions.
US tariffs on Chinese imports were scaled back to 30%, while China has 10% tariffs on American products.
The truce is scheduled to expire on August 12, after which tariffs would rise by 10%. However, Bessent has been optimistic that the truce could be extended.
In an interview on the Fox Business Network last week, Bessent said that 'trade is in a good place' with China.
He added that he hoped to begin having broader discussions with his counterparts about rebalancing the Chinese economy and encouraging China to curb purchases of Russian and Iranian oil.
Bessent said China was in a manufacturing slump and faced a residential real estate market crisis. He argued Beijing must focus on building a consumer economy.
'They can't export their economic problems to the rest of the world; they need to solve them,' Bessent said.
US companies continue to have a rash of criticisms about doing business in China, including the country's newly established rare earth licensing system.
The processing time for licences is long, American firms say, and China requests proprietary and sensitive business information as part of the applications.
In a survey released this month, members of the US-China Business Council said strained relations and tariffs between the two countries remained their biggest concerns.
But they also said Chinese policies favouring domestic companies were eroding confidence in doing business in the country.
This article originally appeared in The New York Times.
Written by: Alan Rappeport and Ana Swanson
©2025 THE NEW YORK TIMES