AsianFin -- The U.S. Commerce Secretary Howard Lutnick on Monday suggested possibility of the tariff truce extension as the new trade talks with China kicked off.
Credit：Xinhua News Agency
Lutnick said the Trump administration appeared “likely” to extend the 90-day trade and tariff truce as senior U.S. officials resumed their talks with their Chinese counterparts. “Is that a likely outcome? Sure, it seems that way, but let’s leave it to President Trump to decide,” Lutnick answered questions about the potential for another 90-day pause in an interview with Fox News.
Washington and Beijing on May 12 reached an agreement on their trade war truce for 90 days, with the U.S. and China agreeing to each lower tariffs by 115%. From mid-May, the U.S. dropped its tariffs on most Chinese goods to 30% from 145%, while China cut its 125% levies to 10%. The tariff suspension is set to expire on August 12.
Lutnick made the remarks after the Chinese and U.S. delegations, led by Chinese Vice Premier He Lifeng and U.S. Treasury Secretary Scott Bessent, kicked off their new round of economic and trade talks in Sweden.
“They’re talking right now, but the decision-maker, of course, is President Trump,” Lutnick said of the state of negotiations with China. “I’m sure the people who are speaking with China are going to go discuss with President Trump how he wants to play it,” Lutnick said. “He’s got an excellent relationship with [Chinese President Xi Jinping], and I think we’ll leave that to Donald Trump to decide.”
Hopes of tariff truce extension is growing ahead of the U.S.-China talks on Monday. Bessent last week indicated that an extension of the August 12 tariff deadline may result from the upcoming U.S.-China talks. “We’ll be working out what is likely an extension” during talks in Stockholm, Bessent said last Tuesday.
“We’re very close to a deal with China. We really sort of made a deal with China, but we’ll see how that goes,” Trump on Sunday told reporters on Sunday.
Earlier Monday, South China Morning Post (SCMP) reported the U.S. and China are expected to extend the truce by another 90 days. During the expected 90-day extension, the two nations will commit to not impose additional tariffs on each other, nor escalate the trade war by other means, the report cited a source.
The Trump administration has frozen restrictions on technology exports to China in order to avoid hurting trade talks with Beijing and to help secure a meeting between Trump and Chinese President Xi Jinping this year, The Financial Times (FT) on Monday reported.
The Bureau of Industry and Security (BIS) under the U.S. Commerce Department, which oversees export controls, has been advised to avoid tough moves on China, the report cited sources.While Trump wants to avoid actions that could hurt efforts to meet Xi, some officials have argued that the US is hamstrung on export controls because of the risk of China’s retaliatory restricting exports of the U.S. critical rare earths and magnets, according to the report.
Besides the possible tariff deadline extension, Bessent last week signaled the talks may help reach sort of agreements such as getting China to slow the “glut of manufacturing that they’re doing and concentrate on building a consumer economy.”
Bessent on July 21 said U.S. and Chinese officials during the new talks could discuss China’s purchase of sanctioned Russian oil and Iranian oil. He repeated the issue a day later, stating Washington wants to discuss China’s buying oil from Russia and Iran, two countries whose energy exports have been subject to U.S. sanctions. He added that “what they’re doing to aid Russia” in its invasion of Ukraine is also a topic that Washington wants to discuss.
The SCMP reported on Monday that both China and U.S. will expound their views on major sticking points during the trade negotiations in Sweden, such as the U.S. concerns over China’s industrial overcapacity, rather than specific breakthroughs. While the previous meetings in Geneva and London focusing on “de-escalation”, Chinese delegation in the latest talks will also press Trump’s team on fentanyl-related tariffs, per the report.
U.S. Trade Representative Jamieson Greer the same day echoed the report, not expecting any major breakthrough during the new meetings. “I don’t expect some kind of enormous breakthrough today, what I expect is continued monitoring and checking in on the implementation of our agreement thus far,” Greer told CNBC.
