Stockholm: The United States and China have reignited formal trade negotiations in Stockholm, Sweden, as the clock ticks down on the expiry of a crucial 90-day tariff truce set to lapse on August 12. This renewed dialogue marks a significant moment in bilateral relations, with both powers under mounting pressure to prevent a fresh escalation in their long-standing trade war and lay the groundwork for a highly anticipated meeting between US President Donald Trump and Chinese President Xi Jinping.
The Stockholm talks come after weeks of informal backchannel communication and are being framed by both governments as a last-ditch effort to preserve economic stability and global investor confidence. Officials familiar with the matter have indicated that the discussions are focused on extending the current ceasefire on tariffs, which has temporarily held off further trade penalties between the two countries. However, the scope of the talks has reportedly expanded to include strategic concerns over industrial policy, technology transfer, and global supply chain disruptions.
A central sticking point in the talks is Washington’s insistence on structural reforms within China’s state-dominated economic model, particularly regarding subsidies to strategic industries and opaque regulatory practices. In contrast, Beijing is demanding the removal of harsh export restrictions on semiconductors, green energy technology, and AI-related innovations that have severely impacted its high-tech sector. China has also raised objections to the US linking trade issues with other sensitive matters like fentanyl production and Taiwan.
The negotiations come at a time of heightened geopolitical sensitivity. While the Biden administration had previously pursued a more multilateral approach, President Trump’s return to the White House has signaled a shift back to aggressive, direct bilateral bargaining. Trump’s administration has made it clear that a face-to-face summit with Xi is conditional on meaningful progress in trade talks and enforceable commitments from Beijing.
The potential extension of the tariff truce is critical not only for US-China relations but also for the global economy. If no extension is agreed upon, the US is expected to hike tariffs from 30% to 45% on over $300 billion worth of Chinese goods, while China may retaliate with broader restrictions on American agricultural products and critical raw materials. This would likely trigger ripple effects across global markets, especially in emerging economies dependent on Chinese manufacturing or US imports.
Despite the tension, markets have reacted with cautious optimism. Stocks in New York and Shanghai recorded modest gains, reflecting investor hope that the talks may avert the looming tariff shock. Analysts, however, have warned that the lack of transparency surrounding the Stockholm negotiations leaves the outcome highly uncertain. Any sign of a breakdown could lead to swift market volatility and renewed fears of a global trade slowdown.
The backdrop of the talks also includes preparation for a possible bilateral meeting between Trump and Xi during the G20 Summit in Seoul or the APEC Summit later this year. However, diplomats on both sides stress that without a substantial agreement emerging from the current negotiations, such a summit may be reduced to mere optics with limited diplomatic value.
As negotiations continue behind closed doors, the international community is closely watching Stockholm. The outcome of these talks could either mark the beginning of a new phase of constructive engagement between the two powers or plunge the global economy back into the uncertainties of a deepening US-China trade conflict.