US and China to talk in Stockholm on trade with eye on Trump-Xi summit later this year

WASHINGTON AP When top U S and Chinese leaders meet in Stockholm they are almost certain to agree to at least leaving tariffs at the current levels while working toward a meeting between their presidents later this year for a more lasting agreement deal between the world s two largest economies analysts say Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are set to hold talks Monday for the third time this year this round in the Swedish capital nearly four months after President Donald Trump upset global pact with his sweeping tariff proposal including an import tax that shot up to on Chinese goods We have the confines of a deal with China Trump commented Friday before leaving for Scotland Bessent described MSNBC on Wednesday that the two countries after talks in Geneva and London have reached a status quo with the U S taxing imported goods from China at and China responding with a tariff on top of tariffs prior to the start of Trump s second term Now we can move on to discussing other matters in terms of bringing the economic relationship into balance Bessent reported He was referring to the U S running a billion pact deficit last year The U S seeks an agreement that would enable it to export more to China and shift the Chinese economic system more toward domestic consumer spending The Chinese embassy in Washington declared Beijing hopes there will be more consensus and cooperation and less misperception coming out of the talks With an eye on a attainable leaders summit Stockholm could provide several answers as to the timeline and viability of that particular goal ahead of a achievable meeting between Trump and Chinese leader Xi Jinping The meeting will be pivotal in starting to set the stage for a fall meeting between Trump and Xi mentioned Wendy Cutler a former U S arrangement negotiator and now vice president at the Asia Society Program Institute Beijing will likely insist on detailed preparations before they agree to a leaders meeting In Stockholm the two sides are likely to focus on commercial announcements to be made at a leaders summit as well as agreements to address major irritants such as China s industrial overcapacity and its lack of control over chemicals used to make fentanyl also to be declared when Xi and Trump should meet Cutler declared Sean Stein president of the U S -China Business Council mentioned Stockholm could be the first real opportunity for the two governments to address structural amendment issues including industry access in China for U S companies What businesses will be seeking coming out of Stockholm would largely be the atmosphere how the two sides characterize the discussions They will also look for clues about a manageable leaders summit because any real deal will hinge on the two presidents meeting each other he noted Fentanyl-related tariffs are likely a focus for China In Stockholm Beijing will likely demand the removal of the fentanyl-related tariff that Trump imposed earlier this year disclosed Sun Yun director of the China plan at the Washington-based Stimson Center This round of the U S -China business dispute began with fentanyl when Trump in February imposed a tariff on Chinese goods citing that China failed to curb the outflow of the chemicals used to make the drug The following month Trump added another tax for the same reason Beijing retaliated with extra duties on specific U S goods including coal liquefied natural gas and farm products such as beef chicken pork and soy In Geneva both sides climbed down from three-digit tariffs rolled out following Trump s Liberation Day tariffs in April but the U S kept the fentanyl tariffs in addition to the baseline rate to which China responded by keeping the same rate on U S products These across-the-board duties were unchanged when the two sides met in London a month later to negotiate over non-tariff measures such as export controls on critical products The Chinese establishment has long protested that American politicians blame China for the fentanyl dilemma in the U S but argued the root issue lies with the U S itself Washington says Beijing is not doing enough to regulate precursor chemicals that flow out of China into the hands of drug dealers In July China placed two fentanyl ingredients under enhanced control a move seen as in response to U S pressure and signaling goodwill Gabriel Wildau managing director at the consultancy Teneo commented he doesn t expect any tariff to go away in Stockholm but that tariff relief could be part of a final transaction deal It s practicable that Trump would cancel the tariff that he has explicitly linked with fentanyl but I would expect the final tariff level on China to be at least as high as the - rate contained in the modern deals with Japan Indonesia Vietnam Wildau explained US wants China to dump less buy less oil from Russia and Iran China s industrial overcapacity is as much a headache for the United States as it is for the European Union Even Beijing has acknowledged the issue but suggested it might be intricate to address America s agreement imbalance with China has decreased from a peak of billion in according to the Census Bureau But China has revealed new markets for its goods and as the world s dominant manufacturer ran a global agreement surplus approaching trillion last year somewhat larger than the size of the U S overall pact deficit in And China s emergence as a manufacturer of electric vehicles and other emerging technologies has suddenly made it more of a financial and geopolitical threat for those same industries based in the U S Europe Japan and South Korea Particular enterprises especially manufacturing enterprises feel more deeply that China s manufacturing capabilities are too strong and Chinese people are too hardworking Factories run hours a day Chinese Premier Li Qiang reported on Thursday when hosting European Commission President Ursula von der Leyen in Beijing Selected people think this will cause particular new problems in the balance of supply and demand in world production We see this obstacle too Li commented Bessent also explained the Stockholm talks could address Chinese purchases of Russian and Iranian oil However Wildau of Teneo mentioned China could demand chosen U S guard concessions in exchange such as a reduced U S military presence in East Asia and scaled-back diplomatic encouragement for Taiwan and the Philippines This would likely face political pushback in Washington The Stockholm talks will be geared towards building a pact agreement based around Chinese purchase commitments and pledges of expenditure in the U S in exchange for partial relief from U S tariffs and export controls Wildau explained He doubts there will be a grand deal Instead he predicts a more limited agreement based around fentanyl That he announced is presumably the preferred outcome for China hawks in the Trump administration who worry that an overeager Trump might offer too much to Xi Associated Press writer Paul Wiseman contributed to this record Source