The U.S. and China will have a third round of trade talks next week in Sweden as the world’s two biggest economies try to hammer out a lasting agreement.
FILE - President Donald Trump shakes hands with China's President Xi Jinping during a meeting on the sidelines of the G-20 summit in Osaka, Japan, June 29, 2019. The U.S. and China will have a third round of trade talks next week in Sweden as the world’s two biggest economies try to hammer out a lasting agreement after a bruising tit-for-tat earlier this year that shook markets and stirred fears about damaging the global economy.
Washington has taken an optimistic tone on the outlook of trade and broader relations with Beijing in recent weeks after a couple rounds of trade talks and discussions about a presidential visit to China later this year to soothe relations between two world powers that have been rocky in recent years. Treasury Secretary Scott Bessent said on Tuesday that the U.S. will meet with Chinese officials next week in Sweden for aon a trade deal. Washington and Beijing agreed to a 90-day suspension of steep tariffs on each other’s exports while negotiations continued. Bessent said the looming Aug. 12 deadline was likely to be extended during an appearance on Fox Business and that trade with Beijing has improved. “I think trade is in a very good place with China," Bessent said. “Hopefully, we can see the Chinese pull back on some of this glut of manufacturing that they're doing and concentrate on building a consumer economy.” The U.S. and China agreed to a 90-day truce in May after tariffs quickly ratcheted up in a quickly escalating trade war earlier this year that saw tariffs climb to 145% on Chinese goods and a 125% on American exports in response. Rates have been lowered to 30% for China’s products and 10% on U.S. goods since the truce to allow time for more negotiations. China has also relaxed restrictions on exports of rare earths and critical minerals used in a wide range of consumer products and defense applications. In exchange, the U.S. has agreed to relax restrictions on advanced semiconductor chips and software, along with some other goods. “It's a sign that there's a real commitment, a real need for this trade deal, that they really don't want to go back to the 125% or higher tariffs that they had placed on China,” said Anita Kellogg, assistant professor of national resource strategy at National Defense University. “There's just a practical reality. China's our second-largest trading partner, used to be first, and having 125% tariffs on that much trade is going to seriously impact the economy.” Washington is also trying to push China to shift away from its state-supported economic model of heavy exports that the U.S. says floods the world with cheap goods other countries cannot compete with and has created excess manufacturing capacity in China. Restoring American manufacturing capacity is one of Trump’s biggest goals in his sprawling tariff agenda. "Hopefully we can see the Chinese pull back on some of this glut of manufacturing that they're doing and concentrate on building a consumer economy," Bessent told Fox Business. China denies subsidizing its industries and is likely to be reluctant to give up its control of the global marketplace on a variety of manufactured goods. It has also struggled to stir more consumer spending in recent years amid a real estate crisis and a lack of a social safety net forcing its aging population to save more to survive. “’Can China shift from that?’ is an even bigger question for its economy,” Kellogg said. “They have very low consumer spending, and if you can't replace the export market with domestic buyers, then your economy would completely fall apart.” Administration officials are also hoping to get China to commit to buying more American goods in a potential trade deal, a condition Beijing has agreed upon but not lived up to in the past. An extension of China’s mid-August trade deadline comes as the administration is also trying to work out deals with dozens of other countries before Trump’s self-imposed cut-off of Aug. 1 for other trading partners to accept terms of a new agreement or face steeper tariffs from the U.S. While he has already delayed an initial 90-day deadline before his so-called reciprocal tariffs took effect, Trump and other administration officials have been firm that Aug. 1 is a hard stop this time. Commerce Secretary Howard Lutnick told CBS on Sunday that countries will start paying tariffs then, “but nothing stops countries from talks to us after Aug. 1.”with other countries that has not included its biggest trading partners. The European Union, Canada and Mexico have not yet been able toand have been hit with surprise increases to prospective tariff rates and sector-specific levies that have created more obstacles to finding a lasting deal.
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