While China-US tariff pause holds, clear path to final deal yet to emerge

Experts Say Trump Is Looking for a 'Win' but Beijing Feels It Holds Considerable Leverage

- Bhagyashree Garekar

The US and China face a tightening deadline to renew their tariff truce, which currently shields them from sky-high tariffs of 125 per cent and 145 per cent, respectively. If not renewed by Aug 12, the world's two largest economies will be back to waging their trade war, or what, in practical terms, amounts to a trade embargo as very little business can be transacted at such steep tariff rates.

The week began optimistically enough with a third round of bilateral talks in Stockholm, which was expected to pave the way for a smooth extension of the current arrangement.

This followed an agreement in May that suspended the triple-digit tariffs and allowed Chinese goods to enter the US with an additional 30 per cent tariff. US goods faced a lower 10 per cent tariff in China. But that expectation was belied in Stockholm, with any extension of the truce becoming contingent on US President Donald Trump's final approval.

Although Treasury Secretary Scott Bessent described the July 28 and 29 talks in Stockholm with Chinese Vice-Premier He Lifeng as "far-reaching, robust and highly satisfactory", he also insisted that he had to take the discussions home to Washington for Mr Trump to sign off on.

At the Chinese end, Vice-Commerce Minister Li Chenggang said the two sides agreed to "continue pushing for a continued extension of the pause".

Mr Bessent has presumably briefed the President by now, but Mr Trump has remained non-committal. All Mr Trump said at a July 30 press conference was: "We're moving along with China... I think we're going to have a very fair deal."

Is the US keeping China hanging to extract some concessions? Or is the US stance a clue that it is Beijing that has a stronger hand in negotiations at this point?

Trade analysts in the US and Asia said there were signs that the negotiations had not gone as well as Washington had hoped.