Hong Kong —
For the third time in as many months, US and Chinese officials will meet in Europe for trade talks — and this time, Beijing is arriving at the negotiating table more emboldened than ever.
Its firm grip on strategic minerals has compelled the Trump administration to roll back some export curbs on China, including a stunning reversal of the ban on sales of a key Nvidia AI chip.
Meanwhile, the Chinese economy has delivered better-than-expected growth months into the trade war, according to government data, posting a record trade surplus that underscores the resilience of its exports as they pivot away from the US market.
And just a few days ago, Beijing reinforced its tough posture at a key summit with the European Union, offering little to address the bloc’s concerns spanning from trade imbalances to the Ukraine war.
When a new round of talks begins in Stockholm on Monday, Chinese negotiators led by Vice Premier He Lifeng are expected to greet their American counterparts with fresh confidence in Beijing’s uncompromising, hard-edged approach – and a growing appetite for further US concessions.
Treasury Secretary Scott Bessent, who’s leading the US delegation, said before the talks in the Swedish capital that the two sides would be working out a “likely” extension of their trade truce, which currently expires on August 12.
The 90-day reprieve, struck at a May meeting in Geneva, held back three-digit tariffs imposed in April that threatened to cut off trade between the world’s two biggest economies. The truce was pulled back from the brink of collapse with further talks in London in June, after each side accused the other of reneging on its promises.
And now, the Stockholm talks may offer clues as to how much longer that detente can hold – and whether the two countries can further bring down remaining tariffs and address other thorny issues, such as tech restrictions, as they work toward a lasting deal.
The latest round of negotiations follows Donald Trump’s recent flurry of trade deals with the United Kingdom, Japan, and other trade partners, part of the global tariff war he launched earlier this year.
But the US President appears to have dialed down his confrontational approach on China, and has spoken enthusiastically about visiting the country at the invitation of its leader Xi Jinping in the “not too distant future.”
Josh Lipsky, chair of international economics at the Atlantic Council, said a stopgap agreement was the most likely outcome this week.
“Right now, all signs point to another 90-day continuation where tariffs remain at 30% and negotiations continue – with the likelihood of a Trump-Xi meeting in the fall,” he said, referring to the level of Trump’s second-term levies on Chinese goods.
“But just as we learned in the spring, the situation can turn on a dime and whether it’s the exit bans or another flash point, this is a fragile ceasefire.”
It was recently revealed that a US Commerce Department employee and a Wells Fargo executive have been banned from leaving China by the Chinese authorities, casting a shadow over the talks. US Commerce Secretary Howard Lutnick denounced the ban as “outrageous.”
Nevertheless, Bessent struck a positive tone when announcing the latest round of negotiations, saying “trade is in a very good place with China.”
“I think we’ve actually moved to a new level with China, where it’s very constructive,” he told Fox Business on Tuesday.
Bessent said the two countries would also discuss China’s purchase of “sanctioned” oil from Russia and Iran.
On Thursday, Lutnick said the proposed spinoff of popular short-video app TikTok’s operation in the US, which is awaiting Beijing’s approval, would be part of the discussions as well.
For their part, Chinese officials have kept the agenda of the talks vague. In a statement last week, the Commerce Ministry said the two sides will “continue consultations on economic and trade issues of mutual concern, guided by the principles of mutual respect, peaceful coexistence, and win-win cooperation.”
For Beijing, a central focus of this week’s negotiations are the remaining US tariffs on Chinese imports, according to Chinese experts.
At about 55%, the tariff includes a 10% “reciprocal” tariff the US placed on trade partners in April, 20% levies imposed on China for what Trump said was its role in the flow of illegal fentanyl into the US, and pre-existing duties, according to the White House.
Chinese experts say a key priority for Beijing is to seek the removal of the 20% fentanyl-related tariffs.
Last month, China announced it would add two more fentanyl precursors to its list of controlled substances, and placed nitazenes – a class of powerful synthetic opioids – on another list of controlled drugs.
He Weiwen, a senior fellow at the Center for China and Globalization, a Chinese think tank, told the state-run Global Times that the key focus of this round of talks is to build on agreements reached in previous talks, and push for more “tangible results.”
“The first priority is resolving the remaining tariff issues, particularly those imposed by the US under the pretext of fentanyl, and the second surrounds how China and the US can further deepen economic and trade cooperation,” said He, who previously served as a diplomat to the US.
Beijing may also ask Washington to further roll back technology export controls it has previously imposed on China, including the blacklisting of hundreds of Chinese companies under the Commerce Department’s Entity List for trade restrictions, according to Wu Xinbo, director of the Center for American Studies at Fudan University in Shanghai.
During his first term, Trump began placing tech restrictions on Chinese firms including national tech champion Huawei. His successor, former President Joe Biden, followed up by broadening the scope of the curbs to a wide swath of categories.
“After this period of US-China rivalry, the US side has come to realize that China holds significant cards – and more importantly, is willing to play them when necessary,” said Wu, who is an adviser to China’s foreign ministry.
The cards, he explained, refer to America’s reliance on China’s supply chain, including but not limited to rare earths minerals and magnets – needed for everything from everyday electronics and vehicles to fighter jets.
At the height of the trade war with the US in April, China leveraged its global dominance in the rare earths supply chain and put new licensing requirements on the exports of seven types of rare earth minerals and several magnets.
The significant decline in rare earth exports from China, despite the trade truce reached in May in Geneva, reignited tensions, prompting Trump to take “countermeasures,” including export controls on chip software, ethane and jet engines. The renewed spat calmed only after the London meeting last month, when Beijing agreed to allow the flow of rare earths and Washington decided to lift its export restrictions.
But China has learned the value of its leverage on US. Wu said the country’s leverage goes beyond rare earths to – among other things – drone and electric vehicle battery supply chains, where China plays a significant role. The divestment of TikTok US from its Chinese owner ByteDance, which is subject to Beijing’s approval, is another card, he said.
“In the past, we didn’t consciously use these cards. Now, I believe China will increasingly take the initiative to consider playing them,” he said.
On Tuesday, Bessent said he intended to warn Beijing over its continued purchase of sanctioned Russian and Iranian oil, as well as its support for Russia’s war against Ukraine. Trump has previously threatened 100% secondary tariffs on goods from countries that continue buying Russian oil, namely China and India, and legislation to that effect has been gaining momentum.
Wu said China is unlikely to entertain such a tariff threat and stop importing oil from Russia or Iran, but he said Beijing is aware that the US may leverage the threat, to force its cooperation on issues such as the Russia-Ukraine conflict and talks with Iran.
