US and China trade talks resume in Stockholm as deadline approaches

Top economic officials from the United States and China convened in Stockholm on July 28 for a fresh round of trade talks, aimed at extending a 90-day truce between the world’s two largest economies. With an August 12 deadline fast approaching, both countries are negotiating to avoid a return to the high tariffs that have characterised the ongoing trade war. Treasury Secretary Scott Bessent led the US delegation, while Chinese Vice Premier He Lifeng represented Beijing in what was a more than five-hour round of discussions at Sweden’s prime minister's office.

The meetings come after several months of escalating trade tensions, with both sides having raised tariffs on each other's goods to over 100 per cent earlier this year. The current temporary tariff pause, agreed to in May, was meant to allow time for further negotiations. Both sides hope to avoid a scenario in which tariffs snap back to even higher levels, potentially triggering significant disruptions to global supply chains.

Truce expected to be extended amid complex negotiations

Reports suggest that both the US and China are leaning toward a 90-day extension of the existing truce, which would push the deadline for a final agreement into mid-November. This extension would buy more time for detailed negotiations, including addressing key issues such as China’s restrictions on rare earth mineral exports, technology exports, and broader trade imbalances.

“Right now, what we’re aiming for is continued monitoring and ensuring that the terms we’ve agreed to thus far are being followed,” US Trade Representative Jamieson Greer told CNBC. He stressed that the discussions would focus on implementing agreements made earlier this year, such as ensuring the continued flow of critical minerals between the two nations. Negotiators from both sides were seen exiting the Stockholm talks without offering any immediate comments, with a second round of discussions set to continue on July 29.

China’s economic leverage has been increasing in recent months, with its economy showing growth of 5.3 per cent in the first half of 2025. Additionally, Beijing’s control over the global supply of rare earth minerals, which are essential for everything from military equipment to consumer electronics, gives it significant bargaining power. In April, China imposed new export restrictions on these crucial materials, heightening tensions and prompting Washington to soften its stance on other trade matters.

US-China talks threatened by geopolitical concerns and pressure

While economic negotiations are ongoing, the trade talks come amid growing geopolitical tensions. US senators from both major political parties are preparing to introduce bills this week that target China over its treatment of minority groups, human rights abuses, and its stance on Taiwan. These bills could complicate the negotiations, as the Trump administration moves to take a hard stance on China’s behaviour in areas outside of trade.

Taiwan’s potential role in the talks is another source of friction. Reports indicated that Taiwan President Lai Ching-te would delay a visit to the US that could have further infuriated Beijing, which considers Taiwan a breakaway province. Any support for Taiwan from the US would likely be viewed as a significant diplomatic challenge for Beijing and could further complicate the trade discussions.

Despite these external pressures, US officials, including Treasury Secretary Bessent, have expressed optimism about the future of the trade talks. “Trade is at a good place with China,” Bessent said, adding that negotiations were “constructive” and focused on achieving balanced trade and economic stability. Analysts, however, note that progress on a deal will likely require more time, with both countries continuing to address a range of complex issues, including trade imbalances, intellectual property concerns, and the role of state-owned enterprises in China’s economy.

(With inputs from agencies)