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 bureaucrats 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 bargain 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 contract 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 declared Friday before leaving for Scotland Bessent reported 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 declared He was referring to the U S running a billion business deficit last year The U S seeks an agreement that would enable it to export more to China and shift the Chinese financial sector more toward domestic consumer spending The Chinese embassy in Washington explained Beijing hopes there will be more consensus and cooperation and less misperception coming out of the talks With an eye on a achievable leaders summit Stockholm could provide specific answers as to the timeline and viability of that particular goal ahead of a feasible meeting between Trump and Chinese leader Xi Jinping The meeting will be vital in starting to set the stage for a fall meeting between Trump and Xi announced Wendy Cutler a former U S bargain negotiator and now vice president at the Asia Society Framework 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 disclosed when Xi and Trump should meet Cutler declared Sean Stein president of the U S -China Business Council commented Stockholm could be the first real opportunity for the two governments to address structural reorganization 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 workable leaders summit because any real deal will hinge on the two presidents meeting each other he stated 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 mentioned Sun Yun director of the China campaign at the Washington-based Stimson Center This round of the U S -China contract 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 various 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 governing body has long protested that American politicians blame China for the fentanyl problem in the U S but argued the root complication 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 disclosed he doesn t expect any tariff to go away in Stockholm but that tariff relief could be part of a final exchange deal It s workable 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 new deals with Japan Indonesia Vietnam Wildau declared 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 matter but suggested it might be complicated to address America s contract imbalance with China has decreased from a peak of billion in according to the Census Bureau But China has uncovered new markets for its goods and as the world s dominant manufacturer ran a global exchange surplus approaching trillion last year somewhat larger than the size of the U S overall agreement 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 Particular people think this will cause certain new problems in the balance of supply and demand in world production We see this predicament too Li explained Bessent also reported the Stockholm talks could address Chinese purchases of Russian and Iranian oil However Wildau of Teneo noted China could demand several U S protection concessions in exchange such as a reduced U S military presence in East Asia and scaled-back diplomatic assistance for Taiwan and the Philippines This would likely face political pushback in Washington The Stockholm talks will be geared towards building a contract agreement based around Chinese purchase commitments and pledges of financing in the U S in exchange for partial relief from U S tariffs and export controls Wildau stated He doubts there will be a grand deal Instead he predicts a more limited agreement based around fentanyl That he mentioned is likely 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 review Source