US-China Start Talks in Stockholm… 'Tariff Truce' Likely to Be Extended by 90 Days

Differences Over Overproduction and Fentanyl Tariffs

Possibility of a Decision at the APEC Leaders' Summit

The United States and China began their third high-level trade negotiations in Stockholm, Sweden, on the 28th. Unlike Japan and the European Union (EU), which are U.S. allies, China is in conflict with the United States, leading observers to predict that a settlement in the negotiations will not be easy.

The Associated Press (AP) reported that "senior U.S. and Chinese trade officials arrived in Stockholm for new trade talks, initiating moves to ease trade tensions between the two countries." Participating in the talks were U.S. Treasury Secretary Scott Besant and U.S. Trade Representative (USTR) Jamieson Greer from the American side, and Vice Premier He Lifeng, known as China's 'economic czar,' from the Chinese side.

This meeting is the third high-level U.S.-China trade negotiation, following the talks held in Geneva, Switzerland, on May 10–11, and in London, United Kingdom, on June 9–10. The third round is expected to run until the 29th.

The South China Morning Post (SCMP) reported, citing sources from both countries, that at the Stockholm meeting, the U.S. and China are expected to extend the 'tariff truce' agreed to in April for an additional 90 days. It added that reaching a level of agreement similar to the trade deals between Japan or the EU and the U.S. would be difficult. However, the SCMP quoted sources saying that the U.S. and China will agree not to escalate the trade war further during the 90 days in which the imposition of ultra-high tariffs will be suspended. Secretary Besant also hinted at an extension of the tariff suspension during an interview with Fox Business on the 22nd, stating, regarding the third high-level U.S.-China trade meeting, "We will resolve what looks likely to be extended."

At the Geneva meeting in Switzerland in May, the U.S. and China agreed to lower tariffs by 115 percentage points for 90 days. This suspension period is set to expire on August 12. If the grace period is extended by three months, the 'tariff truce' between the U.S. and China would continue until November.

In addition, the United States is expected to raise the issue of China's industrial overproduction. On the other hand, China is reported to have demanded that the United States clarify the basis for the 20% 'fentanyl tariff' imposed on China for the distribution of fentanyl (a synthetic drug). Philippe Le Corre, a professor at ESSEC Business School in France, remarked, "A substantive agreement might be reached at the Asia-Pacific Economic Cooperation (APEC) summit to be held at the end of October in South Korea, through talks between Chinese President Xi Jinping and U.S. President Donald Trump."

Reporter: Hyein Lee 3code@hankyung.com