US, China to meet in Sweden for key tariffs talks: What’s at stake?

As the tariff deadline around the corner, the world’s two largest economies are heading to Stockholm for crucial trade talks, as US President Donald Trump pushes forward with a wave of new bilateral deals in Asia. Washington and Beijing are reportedly preparing to discuss a possible extension to their high-stakes tariff truce. This comes as the US has struck fresh agreements with the Philippines and Indonesia, signalling Trump’s expanding trade offensive just weeks before August deadlines.

Stockholm becomes centre stage

As per Reuters, US Treasury Secretary Scott Bessent confirmed that American and Chinese officials will meet in Stockholm next Monday and Tuesday to work out whether to extend the current 90-day window for resolving deep-rooted trade tensions. “I think trade is in a very good place with China,” Bessent told Fox Business on Tuesday, adding that both sides were expected to explore rebalancing the economic relationship. The talks will include top US and Chinese trade officials, including China’s Commerce Minister Wang Wentao and chief negotiator Li Chenggang.

By calling it a positive step for the global economy, Sweden’s Prime Minister Ulf Kristerssonwelcomed the negotiations. “It is positive that both countries wish to meet in Sweden to seek mutual understanding,” Kristersson wrote on X.

What’s at stake?

The US and China are currently observing a temporary truce on retaliatory tariffs that had earlier escalated to triple-digit levels. Under the current deal, tariffs were rolled back, but only temporarily. Unless a new agreement or an extension is reached, tariffs could snap back as early as August, with US rates returning to 145 per cent and Chinese tariffs to 125 per cent, as per Reuters.

Among the sticking points is Washington’s demand for Beijing to scale back what it describes as a state-led, subsidised export model that floods global markets with cheap goods. China denies those claims, arguing its success stems from innovation. Bessent’s deputy, Michael Faulkender, told Bloomberg that the Stockholm talks would also cover China’s rare earth export controls, market access, and trade imbalances. “There is enormous space for us to talk about what for decades has been practices by the Chinese government that give them unfair advantages in the global marketplace,” Faulkender said.

Trump strikes deal with Philippines, Indonesia

Even as US-China discussions inch forward, President Trump is accelerating his push for bilateral trade wins.

On Tuesday, Trump announced a new trade deal with the Philippines, following talks with President Ferdinand Marcos Jr. at the White House. The agreement sets a 19 per cent tariff on goods imported from the Philippines, but crucially, keeps US exports to the Philippines tariff-free.

Shortly afterwards, the Trump administration confirmed the same 19 per cent tariff rate for Indonesia, down from an earlier 32 per cent. Under the revised agreement, Indonesia will remove tariff and non-tariff barriers on most US goods.

According to Reuters, the Indonesia deal had been quietly finalised last week and released only after the Philippines visit.

What US and China have already agreed?

Behind the scenes, both Washington and Beijing have been testing the waters for a broader reset. Since May, Bessent has met twice with Chinese Vice Premier He Lifeng in Geneva and London. Those meetings helped broker a temporary cooling-off period and limited breakthroughs.

According to a spokesperson from the Chinese embassy in Washington, both sides have now finalised the implementation of consensus points reached between Trump and President Xi Jinping. That includes Beijing lifting its export ban on rare earth elements, while the US resumes shipping semiconductor software, aircraft parts, and other industrial goods to China.

US stern warning to China on buying Russian oil

Trade isn’t the only issue on the table. Bessent said he also plans to raise concerns over China’s continued purchase of sanctioned Russian and Iranian oil, and its broader economic support to Moscow during the Ukraine war. He noted growing bipartisan support in the US Senate for imposing 100 per cent tariffs on goods from countries, namely China and India, that continue to import Russian oil.

“I’m going to be in touch with my European counterparts,” Bessent said. “It’ll be very important for the Europeans to also be willing to put on these high levels of secondary tariffs for sanctioned Russian oil.”

What’s next?

Looking ahead, Bessent said the US is preparing a “rash of trade deals” with other countries, and despite Japan’s political uncertainty following Prime Minister Ishiba’s electoral setback, Washington may pursue a deeper trade pact with Tokyo soon. “I wouldn’t be surprised if we aren’t able to iron out something with Japan pretty quickly,” he told Fox Business.

For now, all eyes are on Stockholm. If the US and China fail to extend the current truce, global trade could once again be hit by punishing tariffs, at a time when the world economy is already under strain.

(With inputs from the agencies)