US, China trade talks conclude with agreement to extend tariff truce

Hindustan Times

2 days ago

US President Donald Trump is set to make the final call on maintaining a tariff truce with China before it expires in two weeks, an extension that would mark a continued stabilization in ties between the world's two biggest economies. Scott Bessent, who led the US delegation with Jamieson Greer, later said 'our Chinese counterparts have jumped the gun a little.'(via REUTERS)
The two sides agreed to extend their tariff truce, Chinese trade negotiator Li Chenggang told reporters in Stockholm without providing further details. Treasury Secretary Scott Bessent, who led the US delegation with Trade Representative Jamieson Greer, later said 'our Chinese counterparts have jumped the gun a little.'
Asked on CNBC whether he'd recommend an extension of the pause, Bessent said he'd give Trump the facts, 'then he'll decide.' There's still 'a couple of technical details to work out,' Bessent told reporters Tuesday after two days of meetings with officials from Beijing led by Vice Premier He Lifeng.
The Stockholm negotiations marked the third round of US-China trade talks in less than three months. They wrapped up ahead of an Aug. 12 deadline to resolve differences during a 90-day suspension of sky-high tariffs that had threatened to cut off bilateral trade. Adding an extra 90 days is one option, Bessent said.
'While there is disappointment that nothing material was agreed, the mood seems to be constructive and optimistic about future potential deals,' Kelvin Lam, senior China economist at Pantheon Macroeconomics in London, said in an initial assessment.
Asian shares were mixed in early trade on Wednesday. The S&P 500 snapped a six-day rally.
A 90-day extension would clear the path for Trump to visit China to meet with President Xi Jinping in late October, around the time of an international meeting in South Korea that the US leader is likely to attend.
Speaking to reporters on Air Force One, Trump said he may meet with Xi before the end of the year. Trump also said he heard from Bessent that the talks with China went well.
Trump-Xi Summit?
Both sides have been taking steps to turn down the temperature and reduce flashpoints recently, with Chinese exports of rare earth magnets starting to recover in June and the US saying it would approve shipments of a semiconductor used for artificial intelligence which it had blocked.
This week, the US also declined to allow Taiwanese President Lai Ching-te to transit through the US, removing a potential thorn in ties with the mainland, which claims Taiwan as its own territory.
'All of these moves are setting the stage for what I predict will be a summit between Trump and Xi before Thanksgiving,' Harvard professor Graham Allison said on X. Allison last month met with China's foreign minister and the party secretary of Shanghai, who is a member of the Politburo.
The Stockholm round came on the heels of the Trump administration reaching preliminary tariff deals with Japan and the European Union. Bessent said his Chinese counterparts were in 'more of a mood for a wide-ranging discussion.'
The US treasury chief told CNBC that the Chinese side came to talks with a delegation of 75 people, versus the 15-strong team fielded by Washington. 'We start out in a very large room, probably 12 or 15 on each side of the table,' he said. The 'real work gets' done when delegates 'break down into smaller groups of two-on-two,' he added.
Unlike at the previous talks in London, the US team this time around didn't include Commerce Secretary Howard Lutnick, who oversees Washington's export control regime.
With the outlook for tariffs looking less dire than in April, the International Monetary Fund this week raised its forecasts for global growth this year. The truce has also helped China's economy, with the IMF boosting its 2025 outlook for the country to 4.8%, noting the lower levies and stronger-than-expected activity in the first half.
At issue in the ongoing dialogue is how the two countries seek to maintain a stable trading relationship while applying barriers like tariffs and export controls to limit each other's progress in critical sectors ranging from battery technology and defense to semiconductors.
Greer said the US wants assurances that critical materials like magnets keep flowing so the two sides can focus on other priorities. 'We don't ever want to talk about magnets again,' he said.
Greer said the resumption of China's rare earths exports is Beijing's biggest concession so far. Asked if the US made any commitments to China on its pending 232 investigations, Greer said China asked for status updates on them, but stressed that the eventual duties would be applied globally and not have any exemptions for particular countries.
Reducing the 20% tariffs that Trump imposed over US claims that Chinese companies supply chemicals used to make the illegal drug fentanyl is also a high priority for Beijing, Eurasia Group analysts wrote in a note last week.
In the background of the latest trade talks between Washington and Beijing is the race by several economies to sign tariff deals with Trump before Aug. 1, when he's threatening to impose so-called reciprocal import taxes on the US's major trading partners.