U.S.-China Trade Talks in Stockholm 2025

Senior officials from the United States and China are meeting today, July 28, 2025, in Stockholm, for a new round of discussions aimed at easing longstanding trade and economic tensions between the world’s two largest economies. U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are holding their third meeting this year, marking a critical moment nearly four months after President Donald Trump proposed sweeping tariffs, including an import tax of up to 145% on Chinese goods.

The Stockholm talks are being positioned by both sides as a constructive effort to stabilize a bilateral relationship increasingly strained by tariff wars, technology competition, and geopolitical rivalry. Though the agenda remains undisclosed, several key issues are expected to dominate the discussions, with the potential to shape the tone of future negotiations and lay the groundwork for a possible Trump–Xi Jinping summit later this year.

Structural Reforms in China’s Economy Could Become a Key Turning Point in U.S.-China Trade Negotiations

One of the primary focuses of the meeting is expected to be structural reforms — long-term changes to China’s economic system that would create a more level playing field for foreign companies. Sean Stein, president of the U.S.-China Business Council, noted that this could be the first real opportunity to address issues such as market access in China for U.S. firms, intellectual property protections, and regulatory fairness. Structural reforms are a persistent point of contention, as the U.S. has often criticized China’s state-led economic model, which prioritizes national champions and subsidized exports.

U.S. Tariffs on Fentanyl-Linked Products and China’s Countermeasures Add Complexity to Negotiations

Another crucial item on the agenda is the escalating tit-for-tat tariffs between the two nations. Earlier this year, the U.S. imposed a 20% tariff on fentanyl-related products—a move explicitly tied by President Trump to the opioid crisis. In response, China slapped a 10% tariff on a range of U.S. goods, while also placing two fentanyl precursor chemicals (used to manufacture the drug) under enhanced control in July. Despite this, experts such as Gabriel Wildau from consultancy Teneo suggest that major tariff relief is unlikely in the short term. Wildau noted, “It’s possible that Trump would cancel the 20% 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 15–20% rate contained in recent deals with Japan, Indonesia, Vietnam.”

U.S. Concerns Over China’s Industrial Overcapacity Remain a Major Trade Barrier

A longstanding U.S. grievance is China’s industrial overcapacity — the phenomenon where Chinese manufacturers produce significantly more than domestic or global markets can absorb, often leading to price distortions worldwide. Premier Li Qiang recently defended China's manufacturing strength, emphasizing that “factories run 24 hours a day,” underscoring both productivity and workforce dedication. However, Washington sees this as unfair market behavior that displaces manufacturers in other countries through artificially cheap exports.

U.S. to Push China to Cut Oil Imports from Russia and Iran Amid Geopolitical Pressures

In Stockholm, the U.S. is also expected to pressure China on its oil purchases from sanctioned countries like Russia and Iran, urging Beijing to reduce such imports as part of broader global security efforts. This element adds a geopolitical layer to the economic dialogue, linking trade negotiations to energy diplomacy and sanctions enforcement.

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Stockholm Meeting Likely to Extend U.S.-China Tariff Truce by 90 Days Before August Deadline

One of the most urgent topics will be whether both sides agree to extend their existing tariff and export control truce, originally struck in mid-May. The current truce is set to expire in August, and without an extension or agreement, U.S. tariffs could snap back to triple-digit levels, triggering what some analysts describe as a de facto bilateral trade embargo. Analysts suggest that a 90-day extension of the truce is the most likely outcome — which would help avoid further escalation and allow time for planning a Trump-Xi summit, potentially scheduled for late October or early November.

Trump’s New EU Trade Deal Raises the Stakes for China as Sector-Specific Tariffs Loom

The talks come just one day after President Trump signed a major trade deal with the European Union, which includes a 15% tariff on most EU exports to the U.S., such as automobiles. In return, the EU agreed to purchase $750 billion worth of American energy and make $600 billion in U.S. investments in the coming years. By contrast, no such breakthrough is expected with China at this stage, though the Stockholm meeting remains pivotal.

Meanwhile, the Trump administration is poised to impose new sector-specific tariffs on Chinese goods, targeting sectors such as semiconductors, pharmaceuticals, ship-to-shore cranes, and more. These planned moves have sparked speculation that Washington might delay their implementation to preserve the chance of progress in Stockholm.

U.S. Pauses Tech Export Controls on China to Maintain Momentum in Trade Negotiations

According to reports by the Financial Times, the U.S. Commerce Department’s Bureau of Industry and Security has paused further tech export curbs on China, reflecting the White House’s intent to support ongoing negotiations and avoid derailing plans for a Trump-Xi meeting. Export controls — especially involving sensitive technologies like AI chips, rare earth minerals, and magnets — have been a flashpoint in previous talks in Geneva and London.

Rare earths are critical materials used in everything from military equipment to automobile components like windshield wiper motors. China’s near-monopoly on these minerals has given it significant leverage, and recent restrictions on rare earth exports have disrupted global supply chains.

U.S. Seeks to Rebalance China’s Export-Driven Economy Toward Domestic Consumption

A broader U.S. aim, repeatedly emphasized by Secretary Bessent, is to encourage China to rebalance its economy away from exports toward domestic consumption. This has been a decades-long goal of U.S. policymakers who argue that a consumption-driven Chinese economy would benefit global trade balance and reduce dependency on state subsidies and overproduction.

Trump–Xi Summit May Pave the Way for a Major U.S.-China Trade Agreement Later This Year

The possibility of a landmark Trump–Xi summit later this year continues to loom large over the current talks. Analysts such as Sun Chenghao of Tsinghua University believe a summit could serve as a platform for rolling back the 20% fentanyl-linked tariff, while China could fulfill its 2020 commitment to boost U.S. agricultural purchases and other goods — part of the Phase One trade deal that was never fully implemented.

China is also expected to request relief from multi-layered U.S. tariffs, which now total approximately 55% on most Chinese goods, along with easing of high-tech export restrictions. Chinese officials argue that these steps would help reduce the U.S. trade deficit with China, which stood at $295.5 billion in 2024.

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