China seeks reduction of US tariffs and tech export controls
The meetings may not yield immediate large breakthroughs but the two sides could agree to another 90-day extension of a tariff truce struck in mid-May.
It may also pave the way for a potential meeting between US President Donald Trump and Chinese President Xi Jinping later in the year, though Trump on Tuesday denied going out of his way to seek one.
The delegations met for more than five hours on Monday at Rosenbad, the Swedish prime minister's office in central Stockholm.
US Treasury Secretary Scott Bessent was seen arriving at Rosenbad on Tuesday morning after a separate meeting with Swedish Prime Minister Ulf Kristersson. China's Vice Premier He Lifeng also arrived at the venue.
Neither side made statements after the first day of talks.
China is facing an August 12 deadline to reach a durable tariff agreement with Trump's administration, after reaching preliminary deals in May and June to end weeks of escalating tit-for-tat tariffs and a cut-off of rare earth minerals.
Without an agreement, global supply chains could face renewed turmoil from US duties snapping back to triple-digit levels that would amount to a bilateral trade embargo.
The Stockholm talks follow Trump's biggest trade deal yet with the European Union on Sunday for a 15 per cent tariff on most EU goods exports to the United States, and a deal with Japan.
The Financial Times reported on Monday that the United States had paused curbs on tech exports to China to avoid disrupting trade talks with Beijing and support Trump's efforts to secure a meeting with Xi this year.
Trump pushed back against suggestions he was seeking a meeting with Xi. 'This is not correct, I am not SEEKING anything! I may go to China, but it would only be at the invitation of President Xi, which has been extended. Otherwise, no interest!' he wrote on Truth Social.
Meanwhile, in Washington, US senators from both major parties plan to introduce bills this week targeting China over its treatment of minority groups, dissidents, and Taiwan, emphasizing security and human rights, which could complicate the talks in Stockholm. Taiwan President Lai Ching-te is also set to delay an August trip his team had floated to the Trump administration that would have included stops in the United States, sources familiar with the matter told Reuters on Monday.
The potential visit would have infuriated Beijing, possibly derailing the trade talks. China claims Taiwan as its own territory, a position Taiwan rejects, and denounces any show of support for Taipei from Washington.
Previous US-China trade talks in Geneva and London in May and June focused on bringing US and Chinese retaliatory tariffs down from triple-digit levels and restoring the flow of rare earth minerals halted by China and Nvidia's H20 AI chips, and other goods halted by the United States.
Among broader economic issues, Washington complains that China's state-led, export-driven model is flooding world markets with cheap goods, while Beijing says US national security export controls on tech goods seek to stunt Chinese growth.
Bessent has already flagged a deadline extension and has said he wants China to rebalance its economy away from exports to more domestic consumption − a decades-long goal for US policymakers.
Analysts say the U.S.-China negotiations are far more complex than those with other Asian countries and will require more time. China's grip on the global market for rare earth minerals and magnets, used in everything from military hardware to car windshield wiper motors, has proved to be an effective leverage point on US industries.
China stocks ended higher on Tuesday as a new round of Sino-US trade talks continued, while the Hong Kong benchmark declined with some investors booking profits near the month-end.
China's blue-chip CSI300 Index and the Shanghai Composite Index reversed morning session's losses, closing up 0.39 per cent and 0.33 per cent, respectively.
Hong Kong benchmark Hang Seng dropped 0.34 per cent, while Hang Seng Tech fell 0.35 per cent.
Market sentiment cooled slightly as investors awaited details from the ongoing US-China trade talks that started on Monday in Stockholm.
China faces an August 12 deadline to reach a durable tariff agreement; both China and US are expected to push for an extension of the trade truce. 'A truce extension would calm markets... a confrontational tone or vague outcomes could reignite fears of renewed tariffs down the line, resulting in a risk-off sentiment,' Charu Chanana, Saxo chief investment strategist, said in a note on Tuesday.
Reuters
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