Trade Talks in Stockholm: A Pause, Not a Breakthrough
Beijing and Washington are expected to extend their tariff truce by another three months during trade talks in Stockholm, beginning on Monday. According to sources close to the matter, both sides have agreed to maintain the current suspension of most heavy tariffs on each other’s goods for an additional 90 days while continuing negotiations. This agreement, initially made in May, was set to expire on August 12.
During the third round of trade negotiations between the world’s two largest economies, both countries will focus on expressing their positions on major sticking points rather than achieving specific breakthroughs. These include concerns over China’s industrial overcapacity and the U.S. stance on fentanyl-related tariffs. Sources indicate that neither side is expecting immediate progress on these issues, but they are also not anticipating any escalations in the trade war.
One source mentioned that, during the expected 90-day extension, the two nations will commit to not imposing additional tariffs on each other or escalating the trade conflict through other means. According to three people familiar with Beijing’s position, the Chinese delegation will press Trump’s trade team on fentanyl-related tariffs during the latest meeting. The U.S. imposed a 20% additional levy on Chinese imports in March, citing insufficient efforts by Beijing to stop the flow of fentanyl into the U.S. However, Washington has not provided clarity on what would constitute sufficient progress on this issue.
The Chinese side might be open to a 10% baseline tariff on all imports if the additional duties were lifted. According to the Peterson Institute for International Economics, the average U.S. tariff on Chinese exports currently stands at 51.1%. Beijing considers this excessively high, especially since it already absorbed the 25% increase Trump imposed during his first term.
The People’s Daily, the mouthpiece of China’s ruling Communist Party, stated in an editorial that Beijing is willing to work with Washington to make “substantive progress” in resolving issues during the upcoming trade talks. The newspaper emphasized China’s constructive position and its commitment to resolving issues through equal dialogue and consultation.
Analysts have welcomed the continuation of discussions, though most do not expect sweeping changes from the Stockholm talks. Niklas Swanstrom, director of the Institute for Security and Development Policy, said he does not think the talks will result in a breakthrough but hopes for some symbolic outcome. Frederic Cho, vice-chairman of the Sweden-China Trade Council, believes an extension of the tariff suspension is the most likely outcome.
Scott Bessent, U.S. Treasury Secretary, indicated plans to work out an extension with Chinese counterparts in Stockholm. He suggested that during the next three months, the two sides will address specific questions in different fields. Howard Lutnick, U.S. Commerce Secretary, mentioned that the future ownership of TikTok could be among the topics discussed, even though it is not part of the trade talks.
Philippe Le Corre, head of the Asia programme at French business school ESSEC, noted that the talks in Stockholm would be more like preparations for a real deal. Such an agreement could be clinched during a meeting between Chinese President Xi Jinping and Trump at the Asia-Pacific Economic Cooperation forum in late October.
Lutnick told Bloomberg TV that America is 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 watches closely, Europe, as the host, will follow but remain powerless to influence the outcome.
“Europe is left holding the candle,” Le Corre said. “As long as the China-US relationship remains unresolved, other relationships can’t really be settled either.”
