Deal possible as 90-day pause nears deadline
A breakthrough in trade negotiations between the United States and China the world’s two largest economies appears within reach as the clock ticks down on a 90-day truce set to expire this Tuesday.
The pause, agreed in mid-May, significantly rolled back tariffs on both sides: Washington scaled its duties from a punishing 145% to 30%, while Beijing cut its own from 125% to 10%. Since then, negotiators have been working to extend the arrangement before the August 12 deadline.
Hopes for progress brightened after the most recent round of talks in Stockholm, which US Treasury Secretary Scott Bessent described as “constructive” in a post on X, noting that the two nations “have the makings of a deal that will benefit both of our great nations.” His optimism followed President Donald Trump’s announcement of fresh trade agreements with several countries among them Britain, Japan, Indonesia, the Philippines, Pakistan, and the 27-member European Union all reached after a series of high-pressure negotiations.
The Stockholm meetings marked the third major engagement between Washington and Beijing after earlier sessions in Geneva and London. Led on the Chinese side by Vice Premier He Lifeng, Commerce Minister Wang Wentao, and WTO negotiator Li Chenggang, and on the US side by Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer, the talks covered far more than just tariffs.
Discussions ranged from rare earth mineral exports and semiconductor trade to market access, industrial subsidies, and the US push for ByteDance to sell TikTok to an American company. Beijing, for its part, pressed Washington on dual-use technology exports, overcapacity concerns, and the political fallout from tariffs in an election year.
China has partially resumed rare earth exports under an earlier Trump–Xi agreement, while the US has eased some restrictions on Nvidia’s H20 AI chips — though only under strict conditions. Still, concerns linger in Beijing over potential “backdoor” security risks, a claim Nvidia has denied.
On the more contentious front of fentanyl-related tariffs, China sought clarity on what benchmarks would satisfy US demands for a rollback. The US delegation also raised issues tied to China’s purchase of Iranian oil and alleged supply of dual-use technology to Russia.
The stakes are high. A return to the bruising trade war that erupted during Trump’s first term could unsettle global markets and disrupt supply chains already strained by geopolitical tensions. The International Monetary Fund has warned that a renewed tariff escalation could undermine global growth, even as the current truce prompted a modest upgrade to its 2025 outlook.
While both sides publicly emphasise cooperation, it is ultimately President Trump’s call whether to extend the truce. Analysts are watching for a possible Trump–Xi meeting during the APEC summit in South Korea later this year, which could formalise an agreement and open the door to deeper reforms.
As Vice Premier He Lifeng put it in Stockholm, “Cooperation benefits both sides, while confrontation harms both sides.” That sentiment, while simple, underscores the delicate balance the two economic heavyweights must strike not only for their own prosperity but for the stability of the global trading system.
