U.S. and Chinese negotiators emerged from two days of constructive talks in Stockholm agreeing to seek an extension of their 90-day tariff truce, yet no major breakthroughs were announced. With the August 12 deadline looming, U.S. officials stressed that President Donald Trump holds the ultimate authority to greenlight any extension or let tariffs snap back to triple-digit rates.
Treasury Secretary Scott Bessent described the meetings as “very constructive” but acknowledged the administration has yet to deliver the final signoff, while Trade Representative Jamieson Greer noted extension options remain on the table. Trump, fresh off an EU trade deal in Scotland, said aboard Air Force One that he felt “better than yesterday” about the discussions but deferred any decision until after his return to Washington.
Market Overview:- Tariff truce extension risks snapping back to 100%+ duties without presidential signoff
- Rare earths and AI chip supply chains hinge on continued tariff pause
- IMF upgrade tempers but does not eliminate global growth and trade uncertainties
- Stockholm talks yielded no final agreement; extension decision rests with Trump
- Officials plan another round in ~90 days while carving out industry exemptions
- China presses for tariff cuts and fewer export controls amid U.S. security probes
- Potential year-end Trump‑Xi summit could reset trade relations if truce holds
- Failure to extend may reignite tariffs up to triple digits on key imports
- Next U.S.-EU-Japan agreements will influence Beijing’s negotiation stance
- The constructive tone from the Stockholm talks suggests both the U.S. and China want to avoid an abrupt escalation, raising the odds of at least a temporary extension to the 90-day tariff truce and reducing near-term volatility for global supply chains.
- Keeping the truce alive preserves stability for rare earths, AI chips, and other critical tech imports, giving businesses and investors valuable runway to plan and source components without the shock of snapback duties above 100%.
- Incremental progress, including discussions about carve-outs and industry exemptions, enables both sides to show flexibility and build confidence needed for a longer-term resolution—especially with another negotiation round already scheduled in 90 days.
- President Trump's expressed optimism after the meetings, coupled with improvements in global growth forecasts from the IMF, can support risk appetite and keep markets supported amid ongoing uncertainty.
- The prospect of a year-end Trump–Xi summit offers a high-level diplomatic avenue to “reset” U.S.–China economic relations, potentially paving the way for broader tariff relief and more durable trade architecture.
- Both sides signaling openness to further talks and continued engagement lowers the probability of a full-scale tariff snapback, giving multinational firms confidence to maintain investments and hiring plans in the interim.
- The lack of an announced breakthrough and explicit deferral of a decision to President Trump keeps the risk of tariff snapback hanging over the market—with up to 100% or greater duties looming if the White House declines to extend the deal.
- Critical supply chains—especially for rare earths and advanced semiconductors—remain vulnerable to disruption, as even a brief lapse in the truce could trigger urgent scramble for inventory, production cuts, and price spikes across the tech sector.
- Continued U.S. probes on exports and pressure for China to shift toward consumer-driven growth signal persistent structural tensions, limiting the scope for a long-term resolution and risking future breakdowns even if a short-term pause is achieved.
- China’s push for major tariff relief and fewer controls may clash with U.S. strategy, especially after fresh agreements with the EU and Japan, reducing Beijing’s leverage and raising the chances of a stalemate or further hardening of negotiating positions.
- Every delay in reaching a final deal keeps businesses and markets on edge, increasing the risk of delayed capital investment, cautious hiring, and precautionary stockpiling, which can undercut any positive momentum from improved IMF forecasts.
- A failure to extend the truce could reset the tone of global trade, fueling retaliatory action, fragmenting supply chains, and compounding uncertainty for sectors already battling inflation and margin pressure in a jittery macro environment.
The stakes are high: imports of rare earth minerals and critical tech components—including Nvidia’s H20 (NVDA) AI chips—have been ensnared in tit‑for‑tat levies, and without a truce extension supply chains could face renewed turbulence.
Looking ahead, the next round of talks is expected in roughly 90 days, with China pressing for tariff rollbacks and eased export controls, and U.S. officials pushing Beijing to rebalance toward consumer‑led growth. Trump has signaled a possible year‑end summit with Xi Jinping, a move that could reset economic ties but hinges on the truce’s fate and the fallout from recent EU and Japan agreements.
