On July 28, senior officials from the United States and China will meet in Stockholm in a renewed effort to ease long-standing economic tensions. With a looming deadline and escalating tariff threats, the talks could be a pivotal step toward stabilizing the world's most consequential trade relationship.
Following a preliminary deal reached in June to pause weeks of tit-for-tat tariff hikes, Washington and Beijing are now seeking to expand the agreement before a crucial August 12 deadline. If no resolution is found, tariffs on both sides could skyrocket—potentially exceeding 100% on key industrial goods.
U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are leading the delegations. The meeting comes just one day after European Commission President Ursula von der Leyen met with President Donald Trump in Scotland, where they reached a separate 15% tariff deal.
Trade analysts from both sides of the Pacific remain cautious, predicting no major breakthrough in Stockholm. Still, the meeting is seen as a critical move to prevent further escalation and potentially lay the groundwork for a direct meeting between President Trump and President Xi Jinping later this year.
Previous rounds in Geneva and London (May and June) focused on reducing retaliatory tariffs and restoring the flow of critical goods such as rare earth minerals from China and Nvidia’s H20 AI chips from the U.S.
Yet the discussions have so far avoided deeper structural issues. The U.S. accuses Beijing of flooding global markets with subsidized goods, while China criticizes American export controls imposed under the guise of national security.
China continues to hold a powerful card: its dominance in rare earths and magnets, essential to everything from defense equipment to electric vehicles. This leverage has proven useful in talks with Washington.
Meanwhile, President Trump has applied pressure on several trading partners—including Japan, the Philippines, and Indonesia—to accept new tariff frameworks ranging from 15% to 20%. The administration is now attempting to push Beijing toward greater concessions, especially in reducing reliance on export-driven growth.
Secretary Bessent has also indicated that the U.S. wants to address China’s economic rebalancing, urging a shift from export-led models to domestic consumption. This transition would require China to resolve its prolonged property crisis and expand social safety nets to boost household spending.
China currently faces multiple overlapping U.S. tariffs:
20% tariffs related to fentanyl production
10% retaliatory tariffs
25% tariffs on most industrial goods, reimposed during Trump’s first term
In total, Chinese goods are subject to around 55% in U.S. duties, while reciprocal Chinese tariffs could jump to 125% if talks collapse.
To avoid this, Bessent has hinted at extending the August 12 ceasefire deadline. However, Chinese officials are likely to demand significant tariff rollbacks and relaxation of high-tech export restrictions in return—changes that Beijing argues would help narrow the $295.5 billion U.S. trade deficit with China (as of 2024).
As negotiations unfold, speculation is rising over a potential Trump–Xi summit in late October. Trump has said he will soon decide whether to travel to China—an event that could mark a turning point in both trade and geopolitical relations.
However, as Wendy Cutler, Vice President at the Asia Society Policy Institute, warned:
"The Stockholm meeting is an opportunity to lay the groundwork for a Trump visit, but it requires real progress. Without it, the summit may never materialize."
Michael Froman, former U.S. Trade Representative under President Obama, emphasized that encouraging China to shift toward domestic-led growth has been a bipartisan U.S. policy goal for two decades.
Still, he remains skeptical:
“Can we really use tariffs to fundamentally alter China’s economic strategy? That remains to be seen.”
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