China–U.S. Trade Talks End in Stalemate as August 12 Tariff Deadline Looms

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Trade negotiators from the United States and China wrapped up two days of talks in Stockholm without a breakthrough, leaving a looming August 12 tariff deadline hanging over global markets. While both sides described the discussions as “constructive,” the lack of a formal agreement means the decision now rests squarely with President Donald Trump, who has final discretion over whether punitive tariffs

Constructive Tone but No Agreement

Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer both stressed that the meetings were productive, signaling some goodwill despite the absence of a deal. Bessent told reporters the tone was “very constructive” and noted progress on specific technical issues, such as the flow of rare earth magnets from China to U.S. companies. However, he was quick to clarify that “nothing is agreed until we speak with President Trump.”

Greer echoed the sentiment, saying the negotiators would return to Washington to brief Trump, who would make the ultimate call on whether to extend the current 90‑day tariff pause. Chinese negotiator Li Chenggang suggested the two sides had agreed to continue pushing for an extension, but Bessent pushed back, stressing that no such deal was finalized.

Trump Holds Final Say

Throughout the talks, it was made clear that President Trump retains full discretion over tariff policy. Greer noted that Trump “has final say on all the trade deals,” including whether to maintain the pause. Trump himself told reporters he had spoken with Bessent and described the talks as “very good,” saying he would be briefed Wednesday before making a decision. “We’ll either approve it or not,” Trump said, adding that he expected to meet Chinese President Xi Jinping before the end of the year.

Key Sticking Points

Behind the cautiously upbeat tone, several flashpoints emerged. Bessent emphasized that the U.S. is dissatisfied with China’s continued purchases of Iranian oil, which Washington views as undermining sanctions. He also criticized what he called “unsustainable global imbalances,” warning that other developed economies would raise their own tariff barriers if China does not curb overproduction.

The talks did not touch on politically sensitive issues like TikTok or Taiwan, but negotiators acknowledged that technical hurdles remain unresolved. Bessent said that while some progress was made, “in 90 days we don’t know where we’re going to be.”

Tariffs Poised to Snap Back

If no extension is approved, U.S. tariffs on Chinese goods will jump back to their April levels on August 12, a move Bessent referred to as “boomeranging.” That would mark a dramatic escalation, effectively restoring the ultra‑high tariffs that had acted as a blockade on bilateral trade earlier this year.

While markets largely shrugged off the Stockholm outcome — the muted reaction suggesting investors had not expected a breakthrough — the risk of renewed tariffs looms large. Analysts note that the uncertainty could weigh on consumer goods, technology, and industrial supply chains if the pause expires.

Signs of Progress

Despite the stalemate, both sides signaled areas of cooperation. U.S. negotiators confirmed agreements with China to accelerate rare earth magnet shipments to American companies, a critical component for defense and clean‑tech industries. Bessent also emphasized that Washington does not want a full “decoupling” from China, stressing that dialogue itself was a positive outcome.

Trump’s own comments added a layer of cautious optimism, as he noted that Bessent’s readout of the talks was more positive than the day prior. Li Chenggang likewise told Chinese state media that both sides would “continue to push for the scheduled extension.”

Next Steps

The immediate next step is a White House decision. Trump is set to meet with his trade team Wednesday, where he could approve an extension of the tariff pause or allow rates to snap back. Analysts expect the president to weigh both economic and political considerations, as tariff hikes would ripple through consumer prices and supply chains in the run‑up to the 2026 election cycle.

If the pause is extended, the U.S. and China are likely to reconvene for another round of talks in 90 days. Bessent hinted at this, saying, “the good news is we’re talking.” Still, the underlying issues — from Chinese industrial overcapacity to U.S. concerns over sanctioned oil purchases — remain unresolved.

Market Implications

Wall Street’s muted response underscores that investors were not betting on a Stockholm breakthrough. The S&P 500 and FXI (China large‑cap ETF) traded with little reaction during the press briefings, reflecting expectations that talks would yield more rhetoric than results. Traders appear to be waiting for Trump’s decision rather than pricing in immediate outcomes from the negotiations.

Conclusion

The Stockholm talks ended without resolution, leaving the fate of U.S.–China tariffs in the hands of President Trump. While the tone was described as constructive and progress was made on narrow technical fronts, the big questions remain unanswered. Unless Trump signs off on an extension, tariffs will return to punitive levels on August 12, threatening global supply chains and consumer prices. For now, both sides are talking — but markets are bracing for a White House call that could set the tone for trade relations into 2026.