US and China Resume Trade Talks in Stockholm to Avoid Tariff War

 

US and Chinese officials are holding two days of high-level trade negotiations in Stockholm, Sweden, to defuse long-running economic tensions and avoid a full-blown trade war. The talks, hosted at Rosenbad the Swedish Prime Minister’s office follow a series of meetings earlier this year in Geneva and London, and could result in an extension of the 90-day tariff truce set to expire on August 12. Without a new agreement, US tariffs on Chinese goods could return to triple-digit levels, effectively creating a trade embargo that could further disrupt global supply chains. US Treasury Secretary Scott Bessent and China’s Vice Premier He Lifeng are leading the talks. Bessent also met with Swedish Prime Minister Ulf Kristersson before returning to the venue. No public statements were issued after the first day of discussions, but expectations are focused on extending the truce and possibly paving the way for a Trump-Xi meeting later in the year. President Trump denied that he is actively seeking a meeting with Chinese President Xi Jinping but acknowledged that Xi had invited him to China. Meanwhile, the US has paused certain tech export restrictions to ease trade tensions. Trump recently signed a trade deal with the EU, imposing a 15 percent tariff on most EU exports, and also reached a separate agreement with Japan. These moves may increase US leverage over China in ongoing talks. The Stockholm negotiations are critical to preventing the re-imposition of harsh tariffs and restoring the flow of rare earth minerals and tech components, which are vital to industries in both countries.

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Despite progress in Stockholm, political developments back in Washington threaten to complicate US-China trade talks. US lawmakers from both Republican and Democratic parties plan to introduce new legislation targeting China for its policies on minority groups, political dissidents, and Taiwan. These bills could spark backlash from Beijing, making it harder for both sides to reach a trade agreement before the August 12 deadline. Taiwan remains a flashpoint. President Lai Ching-te of Taiwan is reportedly postponing a potential US visit that had been floated earlier this year. Any US support for such a trip would have enraged Beijing and risked collapsing the Stockholm negotiations altogether. China considers Taiwan a breakaway province, while Taiwan insists on its independence. The United States has long walked a diplomatic tightrope between the two. In addition to political frictions, the US continues to push China to shift from its export-heavy economy to a more consumption-driven model. This has been a long-standing goal for US policymakers, but Beijing has been slow to make that transition. The United States also complains that China’s state-subsidized exports are flooding global markets and undercutting fair competition. On the tech front, Washington had previously blocked Chinese access to advanced AI chips and restricted exports of critical materials. These restrictions were partially paused to avoid disrupting the Stockholm talks and potentially secure a face-to-face meeting between Trump and Xi later in the year. Analysts agree that compared to negotiations with Japan or the European Union, US-China trade relations are far more complex. China’s dominance in rare earth minerals crucial for military and electronic manufacturing gives Beijing significant leverage. Any failure to reach a deal could lead to major disruptions across global industries and sour future diplomatic ties between the world’s top two economies.

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