China, US to extend tariff pause at Sweden talks by another 90 days: sources
Despite expected extension, insiders say trade talks unlikely to yield breakthroughs on specific issues though no escalations anticipated
Beijing and Washington are expected to extend their tariff truce by another three months at trade talks in Stockholm beginning on Monday, according to sources close to the matter on both sides.
China and the United States agreed in May to remove most of the heavy tariffs levied on each other’s goods for 90 days while continuing trade negotiations. That suspension is set to expire on August 12.
During the third round of trade negotiations between the world’s two biggest economies, both will expound their views on major sticking points – such as the US’ concerns over China’s industrial overcapacity – rather than achieve specific breakthroughs, the sources said.
One source said that, during the expected 90-day extension, the two nations will commit to not impose additional tariffs on each other, nor escalate the trade war by other means.
According to three people familiar with Beijing’s position, while the earlier discussions in Geneva and London focused on “de-escalation”, in the latest meeting the Chinese delegation will also press Trump’s trade team on fentanyl-related tariffs.
US President Donald Trump imposed a 20 per cent additional levy on Chinese imports in March, claiming that Beijing had not done enough to stop the flow of fentanyl into the US. Washington has offered no indication of what it considers sufficient progress on fentanyl to justify easing the tariffs. The Chinese side could seek greater clarity on that threshold during the Stockholm round.
One person familiar with the matter said that Beijing considered the 20 per cent fentanyl tariffs “unfair” but might still be able to digest a 10 per cent baseline tariff on all imports if the additional duties were lifted.
According to the Peterson Institute for International Economics, a Washington-based think tank, the average US tariff on Chinese exports currently stands at 51.1 percent. Beijing considers this excessively high, especially since it already absorbed the 25 percent increase Trump imposed during his first term.
People’s Daily, the mouthpiece of China’s ruling Communist Party, said in an editorial on Sunday that Beijing was willing to work with Washington to make “substantive progress” in resolving issues during the coming trade talks in the Swedish capital.
“China has always maintained a constructive position and insisted on resolving issues through equal dialogue and consultation,” the newspaper said.
“It is willing to work with the US to take the economic and trade talks in Sweden as an opportunity to continuously enhance consensus, accumulate mutual trust, reduce misjudgments and strengthen cooperation.”
The editorial attributed to Zhong Sheng - a homonym in Chinese for “the voice of China” - also highlighted equal dialogue on the basis of mutual respect.
“China is fully aware of the long-term and complex nature of the negotiations,” the article said, adding that Beijing was firmly opposed to any attempt to undermine the multilateral trading system through unilateralism and protectionism.
While analysts have welcomed the continuation of discussions, most do not expect any sweeping changes to emerge from the negotiations in Stockholm.
“Don’t hold your breath. I don’t think it’s going to be a breakthrough, but I hope I’m wrong,” Niklas Swanstrom, director of the Institute for Security and Development Policy, a think tank based in Stockholm, said ahead of the talks.
“I would also be disappointed if nothing comes out. I mean, some sort of deal, even if it’s minor – something symbolic has to come out of this.”
Frederic Cho, vice-chairman of the Sweden-China Trade Council, said an extension of the tariff suspension would be the most probable outcome, as US Treasury Secretary Scott Bessent told Fox Business on Tuesday that he planned to work out an extension with his Chinese counterparts in Stockholm.
“I think the likely outcome of the talks is an extension for another three months, possibly because that’s been the logic so far,” Cho said. “And then during that period they will be addressing specific questions in different fields.”
In an interview with CNBC last week, US Commerce Secretary Howard Lutnick suggested that the future ownership of the popular TikTok short video platform could be among the topics addressed, even though “it’s not really part of the trade talks”. TikTok faces a ban in the US unless Chinese owner ByteDance cedes control to an American buyer.
Both Bessent and Lutnick took part in the two earlier rounds of US-China trade talks this year, held in Geneva in May and London last month.
Philippe Le Corre, head of the Asia programme at French business school ESSEC, said the talks in Stockholm would be more like preparations for a real deal.
Such an agreement could be clinched, he added, at a meeting between Chinese President Xi Jinping and Trump during the Asia-Pacific Economic Cooperation forum, scheduled to be held in South Korea in late October.
“It will allow people to figure out the details of the agreement, whose content we still don’t know much about, and then the next meeting will be between the two No 1s,” he said.
Lutnick told Bloomberg TV last week that America was open to normal trade, and the real area of negotiation would be how to further open up each other’s markets and where to draw the line on sensitive areas.
While the world will watch the proceedings closely, Le Corre said Europe will be following closely as host – but was powerless to influence the outcome.
“Europe is left holding the candle,” he said. “It’s a French expression. When there’s a love triangle, there’s always someone standing by. As long as the China-US relationship remains unresolved, other relationships can’t really be settled either.”