SANTOSTILO US AND CHINA HOLD TARIFF TRUCE TALKS IN STOCKHOLM TO DEFUSE TRADE TENSIONS

Stockholm Hosting High-Stakes Talks to Defuse Trade Tensions

From July 28–29, 2025, high-level economic officials from the United States and China held marathon trade negotiations in Stockholm, underlining the urgency to prevent a return to crippling tariffs. The sessions were led by U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, and aimed primarily at finalizing a 90‑day extension to the current tariff truce, set to expire on August 12.

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Background: Truce First Forged in Geneva

In May 2025, the two countries agreed to a temporary pause on most punitive tariffs: U.S. tariffs on Chinese imports were cut to around 30%, and China reciprocated with a 10% rate on U.S. goods . Since then, two prior rounds of negotiations occurred in Geneva and London, focused on rare-earth exports, intellectual property, and stabilizing frayed economic ties 

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What’s on the Table in Stockholm

While official details remain limited, the talks centered on:

• Extending the tariff truce to prevent tariffs snapping back to triple-digit levels (up to 145% on U.S. imports and 125% on Chinese goods) after August 12

• Broader economic friction points: including China’s industrial overcapacity, its imports of Russian and Iranian oil, and U.S. concerns over fentanyl precursor chemicals sourced from China.

• Rare earth trade and technology controls: China hinted at easing certain export restrictions, while the U.S. offered softening on tech export curbs—especially in semiconductor-related industries.

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Progress Without Grand Breakthroughs

According to U.S. Trade Representative Jamieson Greer, the discussions were “constructive,” though not expected to yield sweeping agreements . Sustaining the current truce remains the priority, creating space for follow-up talks on deeper structural reforms.

Both sides have expressed cautious optimism. Bessent described the evolving dialogue as having reached “a new level” while Chinese state media and U.S. officials signaled progress toward mutual  trust. Sweden’s Prime Minister welcomed the talks and suggested they lay groundwork for a possible Trump–Xi summit later in 2025.

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Markets and Global Spillover

Financial markets greeted the negotiations with relief. Risk-off sentiment eased as the prospect of re-escalation faded. Broadly, analysts warn that a failure to extend the truce could spur severe disruptions in global supply chains and commodity markets—especially in semiconductor, auto, and tech sectors .

The talks also come amid parallel U.S. trade negotiations with the EU, Japan, and ASEAN nations, reinforcing the administration’s effort to reshape global trade alliances ahead of looming August deadlines and domestic political timelines 

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Strategic Significance & Outlook

• Immediate aim: Avoid tariff escalation by securing the extension before August 12.

• Mid-term goals: Lay the groundwork for addressing core issues—such as trade imbalance, tech controls, and supply chain resilience—without triggering confrontation.

• Long-term implications: Stockholm could catalyze a future presidential-level meeting. A successful truce extension may pave the way for joint commitments to rare earth trade, manufacturing rebalancing, and geopolitical restraint .

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Summary Table