Will the US-China Trade Truce Get a Lifeline? Insights from the Upcoming Talks!

As tensions rise in global trade, the US and China are gearing up for crucial talks that could lead to a significant 90-day extension of their current trade war truce. Scheduled to commence on Monday in Sweden, these discussions will be led by Treasury Secretary Scott Bessent for the US and Vice Premier He Lifeng for China. The backdrop of these negotiations is marked by a framework deal recently announced by President Trump with the European Union, aiming to bolster US economic relations amidst ongoing tariff disputes.

The original truce, which saw both nations temporarily lower tariffs that had soared to over 100%, is set to expire on August 12. Reports indicate a favorable outlook from both sides, with sources suggesting that a three-month extension could be on the table, easing fears of renewed tariff conflict. Last week, Bessent characterized the talks as being in a “very good place,” raising optimism about the potential for another peace agreement.

Additionally, the US has reportedly frozen restrictions on exporting high-end technology to China in a strategic move to facilitate smoother negotiations and secure a future meeting between Trump and President Xi Jinping. Central to these talks is the contentious issue of technology exports, particularly AI chips, with US officials concerned about military applications in China.

The timing of these discussions follows recent trade agreements between the US and both the EU and Japan that have sought to alleviate economic tensions and promote collaborative trade. In contrast, expectations for a breakthrough in the upcoming US-China talks remain low, although there is cautious optimism that a truce extension could prevent further tariff disruptions and stabilize global trade.