Stockholm — US and Chinese officials agreed to seek an extension of their 90-day tariff truce after two days of talks in the Swedish capital aimed at defusing an escalating trade war between the world’s two biggest economies that threatens global growth.
No major breakthroughs were announced, and US officials said it was up to President Donald Trump to decide whether to extend a trade truce that expires on August 12 or potentially let tariffs shoot back up to triple-digit figures.
After months of threatening high tariffs on trading partners, Trump has secured trade deals with the EU, Japan, and other countries, but China’s powerhouse economy and grip on global flows of rare earth minerals make the talks particularly complex.
In May both sides held back on imposing triple-digit tariffs on each other in what would have amounted to a bilateral trade embargo. But global supply chains and financial markets could face renewed turmoil without an agreement.
Trump will have the final say on whether to prolong a truce, US treasury secretary Scott Bessent said. Another 90-day extension is also an option, US trade representative Jamieson Greer added.
“We’ll report back to him [Trump] on the process we had here. We had constructive meetings for sure, to go back with the positive report. But the extension of the pause, he’ll decide,” Greer said after talks at Rosenbad, the Swedish prime minister’s office.
Bessent said another meeting between US and Chinese officials was likely in about 90 days, and the agreements on the flow of Chinese rare earth minerals were becoming more refined after previous talks in Geneva and London.
“There was good personal interaction being built up, good, mutual respect. I think we understand their agenda much better,” he said.
High stakes
Underlining the stakes, the IMF on Tuesday raised its global growth forecast but flagged a potential rebound in tariff rates as a big risk.
Li Chenggang, China’s top trade negotiator, said both sides fully recognised the importance of maintaining a stable and sound economic and trade relationship.
“The Chinese and US economic and trade teams will maintain communication, exchange views on economic and trade issues in a timely manner, and continue to promote the stable and healthy development of bilateral economic and trade relations,” Li said.
The talks could lead to a meeting between Trump and Chinese President Xi Jinping later in the year, though Trump denied going out of his way to seek one and US officials said the topic was not discussed.
The Stockholm meetings included a lengthy discussion on the US and Chinese economies, with Greer and Bessent emphasising the need for China to shift away from a state-led, export-driven manufacturing economy to one powered by increased consumer demand, which would help US exports.
The Stockholm talks come after Trump’s biggest trade deal yet with the EU Sunday for a 15% tariff on most of the bloc’s exports to the US, and a deal with Japan. That agreement has brought a measure of relief to the EU but also frustration and anger, with France denouncing the deal as a “submission” and Germany, Europe’s largest economy, warning of “significant” damage.
China can exercise a degree of leverage with its grip on the global market for rare earth minerals and magnets, used in everything from military hardware to car windshield wiper motors, analysts say.
Unlike the EU, it does not rely on the US for security ties and can let trade talks play out for several more months, said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
“China is well aware of its strong negotiating position, as could clearly be seen in the temporary escalation observed in April,” he said.
Sword of Damocles
“But over Europe always hangs the sword of Damocles: the US withdrawing its security guarantee, and that is why the EU did not escalate the situation like China did.”
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 US.
Among broader economic issues, Washington says 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.
Separately, China’s industry minister on Tuesday met a delegation of US businesses, including Apple, in Beijing, and pledged to uphold fair and open market competition and provide support and services for foreign enterprises.
Reuters
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