US And China Race To Secure Tariff Pause Before August 12 Deadline

Without a new deal, American levies could return to triple-digit levels — effectively imposing what some analysts describe as a “bilateral trade embargo.”

Trade watchers do not expect a similar breakthrough with China this week but say the priority is a temporary truce to prevent new disruptions.

Source : Freepik

US and Chinese negotiators are set to gather in Stockholm for a fresh round of discussions aimed at easing tensions in the prolonged trade dispute between the world’s two biggest economies.

The talks, which will begin on Monday, are expected to focus on extending the current tariff ceasefire by 90 days, providing breathing space ahead of a potential meeting between President Donald Trump and Chinese President Xi Jinping in late October or early November, reported Reuters.

Beijing faces a deadline of 12 August to secure a lasting tariff arrangement with Washington. Earlier agreements in May and June temporarily froze tit-for-tat tariff hikes and eased curbs on rare earth mineral exports. Without a new deal, American levies could return to triple-digit levels — effectively imposing what some analysts describe as a “bilateral trade embargo.”

Focus on Extension, Not Breakthrough

The Stockholm dialogue follows Trump’s landmark agreement with the European Union over the weekend, under which the EU accepted a 15 per cent tariff on most of its exports, including autos, while committing to purchase $750 billion worth of US energy and make $600 billion in investments.

Trade watchers do not expect a similar breakthrough with China this week but say the priority is a temporary truce to prevent new disruptions. Scott Kennedy of the Center for Strategic and International Studies said: “I’d be surprised if there is an early harvest on some of these things but an extension of the ceasefire for another 90 days seems to be the most likely outcome.”

President Trump told reporters on Sunday, “We’re very close to a deal with China. We really sort of made a deal with China, but we’ll see how that goes.”

Key Sticking Points Remain

The disputes run deeper than tariff rates. Previous talks in Geneva and London largely sought to dial down existing tariffs and restore flows of goods, including China’s rare earth minerals and Nvidia’s H20 AI chips. More complex issues — such as US criticism of China’s state-led, export-driven model and Beijing’s complaints over Washington’s high-tech export controls — are yet to be fully addressed.

US Treasury Secretary Scott Bessent has already hinted at a truce extension but reiterated Washington’s long-standing demand that China rebalance its economy towards domestic consumption. Analysts point out that Beijing’s dominance in rare earth minerals — critical for everything from defence equipment to car components — gives it substantial leverage in the negotiations.

In the background, there is growing speculation about a possible Trump–Xi summit in the autumn. Sun Chenghao of Tsinghua University said such a meeting could see progress on sensitive issues, including US 20 per cent tariffs on Chinese goods linked to fentanyl. In return, China may revive its 2020 commitment to purchase more American farm produce and industrial goods.

For now, attention is firmly on Stockholm. The outcome will determine whether the fragile truce holds, preventing a dramatic escalation that could rattle global supply chains and financial markets.