US and Chinese officials are holding two days of talks in Stockholm to extend their tariff truce and address key disputes, including fentanyl-related tariffs and technology export controls. This marks their third meeting in less than three months, led by Chinese Vice Premier He Lifeng and US Treasury Secretary Scott Bessent.

The discussions come as both nations weigh an extension of the current pause on tariffs, with Bessent calling a deal “likely.” Progress here could pave the way for a potential meeting between President Donald Trump and Xi Jinping later this year.

At the heart of the talks are sensitive issues: Beijing’s grip on rare-earth magnets crucial for EVs and defence, Washington’s chip curbs targeting China’s AI ambitions, and the US’s 20% fentanyl tariff, which Beijing wants removed. China recently tightened controls on chemicals linked to fentanyl, but the US insists those steps fall short.

Energy trade is another flashpoint. China continues to buy Russian and Iranian oil despite sanctions, while slashing its US energy imports to near zero in June. Both sides, however, have made small gestures: China suspended an antitrust probe into DuPont and increased rare-earth shipments, while the US eased restrictions on lower-end chip exports.

Business leaders are pushing for progress, arguing that even a narrow deal—such as cutting fentanyl tariffs—could open the door to broader tariff relief and boost US exports of farm goods, energy, and industrial products.

The Stockholm talks highlight a critical moment: balancing deepening strategic rivalry with pragmatic economic cooperation as deadlines loom and markets await clarity.

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