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Gold drops to a near 2-week low after US and EU agree on tariff deal
On Monday, gold prices dropped to their lowest levels in almost two weeks as the framework trade agreement reached between the United States of America and the European Union prior to the deadline for tariffs on August 1, boosted the appetite for risky assets. As of 0208 GMT spot gold was down by 0.1%, at $3,332.18 an ounce. It had reached its lowest level since 17 July. U.S. Gold Futures slipped 0.1% to $3,331.60. The U.S. and the European Union reached a framework agreement on trade on Sunday. It imposed a 15% tariff on the majority of EU goods, half the rate that was threatened. This prevented a larger trade war between these two allies who account for nearly a third the global trade. The agreement did not resolve key issues, such as tariffs on spirit. According to Jigar Trivedi of Reliance Securities' senior commodity analyst, the agreement also lowered the dollar index and provided some relief for gold. The U.S. Dollar Index eased by 0.1% making greenback bullion prices more affordable to overseas buyers. After the agreement, risk sentiment improved with European currencies and U.S. Stock index futures trading higher. Senior U.S.-Chinese negotiators will meet later today in Stockholm to discuss long-standing disputes in economics, hoping to extend the truce that prevented higher tariffs. "In the near term, we do not expect gold to undergo wild swings." Investors have their eyes on a crucial week in U.S. economic data and monetary policy," Trivedi stated. After its two-day meeting, the Federal Reserve is expected maintain its benchmark rate between 4.25% and 4.50%. U.S. president Donald Trump said he met with Powell on Friday and that the Fed chief may be inclined to reduce interest rates. Silver spot was up by 0.2% to $38.23 an ounce. Platinum gained 0.6%, to $1.409.50, and palladium increased 0.6%, to $1.227.76. (Reporting and editing by Subhranshu S. Sahu in Bengaluru.
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US and China to start new talks on tariff truce, easing the path for Trump-Xi Meeting
The top U.S. economic officials and Chinese economic officials are scheduled to resume their talks on Monday in Stockholm to address long-standing economic disputes that have been at the heart of the trade war between two of the world's largest economies. They hope to extend the truce for three months while preventing tariffs from rising sharply. China faces a deadline of August 12 to reach a lasting tariff agreement with the administration of President Donald Trump. Beijing and Washington had reached preliminary agreements in May and early June to put an end to weeks of escalating tariffs, including a ban on rare earth minerals. If there is no agreement, the global supply chain could be thrown into turmoil by U.S. tariffs returning to triple-digit rates that would amount a bilateral embargo. The Stockholm talks follow Trump's largest trade deal to date with the European Union, which was announced on Sunday. It included a 15% tariff for most EU exports into the U.S. including automobiles. The EU will also invest $600 billion in U.S. energy and buy $750 billion of American energy over the next few years. Trade analysts say that a similar breakthrough in the U.S. China talks is unlikely, but a 90-day extension to a tariff- and export-control truce reached in mid-May seems likely. A longer extension would help prevent further escalation, and allow for planning a possible meeting between Trump and Chinese president Xi Jinping at the end of October or beginning of November. A U.S. Treasury spokeswoman declined to comment on a South China Morning Post article citing unnamed sources who said that the two sides will refrain from introducing any new tariffs for 90 days or taking other actions which could escalate the trade conflict. Trump's administration will soon impose new tariffs on China, including those on semiconductors. Pharmacies, ship to shore cranes, and other products. "We are very close to making a deal with China." "We're very close to a deal with China," Trump said on Sunday, before European Commission President Ursula von der Leyen signed the tariff agreement. DEEPER ISSUES The previous U.S.-China talks held in Geneva and London between May and June were aimed at reducing the U.S. and Chinese tariffs from triple digit levels, and restoring flow of Nvidia H20 AI chips as well as other goods that had been halted in the United States. The talks so far have not covered broader economic topics. The U.S. has complained that China's export-driven, state-led model floods the world's markets with cheap products, while Beijing complains that U.S. export controls on technology goods are meant to stunt Chinese economic growth. "Geneva and London really were just trying to get their relationship back on track, so that at some point they could actually negotiate about the questions which are the source of the initial disagreement between the two countries," said Scott Kennedy. He is an expert in China economics at the Center for Strategic and International Studies, Washington. Kennedy stated that "I would be surprised if some of these things were harvested early, but an extension of 90 more days of the ceasefire seems the most likely result." U.S. Treasury secretary Scott Bessent already announced a deadline extension. He also said that he wanted China to rebalance their economy from exports towards more domestic consumption, a goal of U.S. policymakers for decades. Analysts believe that the U.S. and China negotiations will take more time than other Asian nations. China's hold on the world market for rare earth magnets and minerals, which are used in everything from car windshield wiper motors to military hardware, has proven to be a powerful leverage point against U.S. industry. TRUMP-XI MEETING? The background to the discussions is speculation regarding a possible Trump-Xi meeting in late October. Trump said that he would decide on his historic trip to China soon, but a new flare up of tariffs and export control measures could derail the planning. Sun Chenghao is a fellow with the Center for International Security and Strategy at Tsinghua's Center for International Security and Strategy, Beijing. He said the Trump-Xi Summit would give the U.S. an opportunity to lower its 20% tariffs against Chinese products related to fentanyl. He said that in exchange for the Chinese commitment to purchase more U.S. farm goods and other goods by 2020, they could fulfill their 2020 pledge. Sun stated that the future summit of heads of state is a very positive prospect for the negotiations, as everyone wants to achieve an agreement or pave a way ahead. Analysts said that China would likely ask for a further easing of U.S. export controls on high-tech products and a reduction in the multi-layered U.S. duties totaling 55 percent. Beijing argues that these purchases will help reduce the U.S.-China trade deficit, which is expected to reach $295.5 billion by 2024. (Reporting and editing by Diane Craft; David Lawder)
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Stocks celebrate Trump's trade deal after EU agreement
The euro strengthened on Monday, after a trade deal between the United States of America and the European Union lifted the mood and provided clarity during a crucial week that was highlighted by Federal Reserve policy meetings and Bank of Japan meetings. A week after signing a deal with Japan to lower tariffs on automobile imports, the U.S. has struck a framework agreement with the European Union. The U.S. will impose a 15% tariff on the majority of EU goods. The deadline for finalising trade agreements is August 1. Talks between the U.S., China and Sweden are scheduled to take place on Monday amid expectations of a 90-day extension of the truce between these two top economies. Prashant N. Newnaha, senior Asia-Pacific rate strategist at TD Securities, said: "A 15% tariff against European goods, the forced purchase of U.S. military and energy equipment, and zero tariff retaliation from Europe is not negotiation. That's art of deal." "A huge win for the U.S." S&P 500 Futures increased by 0.4%, while Nasdaq Futures gained by 0.5%. The euro strengthened across the board against the dollar sterling and the yen. European futures soared by nearly 1%. In Asia, Japan’s Nikkei fell after reaching a high of one year last week, while MSCI’s broadest Asia-Pacific share index outside Japan rose 0.27%. This was just a fraction shy of its almost four-year-high it reached last week. The baseline tariff of 15% is still considered by many to be too high in Europe, but it's better than the 30% rate that was threatened. The agreement with the EU gives clarity to businesses and prevents a larger trade war between two allies who account for almost one-third of global trade. "Put together, the evidence we have seen with Japan, the EU and the talks that will be held between the U.S.A. and China in Stockholm, this negates the risk of a long-term trade war," said Tony Sycamore. The importance of the August tariff deadline is now significantly diminished. Early trading saw the Australian dollar rise 0.12% to $0.65725, hovering near last week's peak of nearly eight months. FED, BOJ AWAIT Investors will be watching closely for the Fed's and BOJ's monetary policy meetings, as well as the U.S. monthly employment report, and the earnings reports of megacap companies Apple and Microsoft. Investors will need to pay attention to the comments of the officials to determine the future interest rate path. The BOJ can now raise rates this year because of the trade agreement with Japan. The Fed will likely be cautious about any further rate cuts, as officials are awaiting more data before lowering rates. They want to know if tariffs worsen inflation. The tensions between Trump and Jerome Powell, the Fed chair, have increased as a result of Trump's repeated criticisms. Two Trump-appointed Fed Board members have given reasons to support a rate reduction this month. ING economists predict that December will be a likely starting point for rates cuts. However, it could be a cut of 50 basis points if evidence about weaker GDP growth and jobs becomes more evident than we expect. In a note, they stated that "this would be similar to the Federal Reserve’s actions in 2024 where it waited to commit to a low interest rate environment until it felt completely comfortable." (Reporting and editing by Sam Holmes; Ankur Banerjee in Singapore, Gregor Stuart Hunter)
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Oil prices rise as US-EU trade deal boosts optimism
The oil prices increased on Monday, after the U.S. concluded a trade agreement with the European Union. It is also possible that the tariff pause will be extended with China. This reduces concerns about higher tariffs affecting economic activity and fuel demand. Brent crude futures rose 22 cents or 0.32% to $68.66 a bar by 0035 GMT, while U.S. West Texas Intermediate Crude was at $65.38 a bar, up 22cents or 0.34%. Tony Sycamore, IG's markets analyst, said that the U.S. - European Union trade agreement and a potential extension of U.S. - China tariff pause support global financial markets. On Sunday, the United States and European Union reached a framework agreement that will impose an import tariff of 15% on most EU products. This is half the rate threatened. The agreement avoided a larger trade war between the two allies, who account for nearly one-third of world trade and could reduce fuel demand. Senior U.S.-Chinese negotiators are also meeting in Stockholm, Sweden on Monday to try and extend the truce that has kept tariffs from rising sharply before the deadline of August 12. The oil price fell to its lowest level in three weeks on Friday, as concerns about global trade and the prospect of increased Venezuelan oil supplies weighed. Sources at the company said that Venezuela's PDVSA, the state-owned oil company, is preparing to resume its work in its joint ventures with terms similar to those of Biden's licenses once U.S. president Donald Trump reinstates authorizations for its partners, allowing them to export and operate oil through swaps. Although prices rose slightly on Monday, the prospects of OPEC+ easing further supply restrictions limited the gains. The Organization of the Petroleum Exporting Countries (OPEC) and its allies will meet on Monday at 1200 GMT. Four OPEC+ delegates stated last week that it is unlikely the panel will recommend a change to existing plans for eight members to increase oil production by 548,000 barrels a day in August. A second source also said that it is too early to tell. Summer demand helps absorb the extra barrels. JP Morgan analysts reported that global oil demand increased by 600,000 barrels per day (bpd) in July compared to the previous year. Global oil stocks also rose 1.6 millions bpd. As part of the fourth phase of the military operation against Israel in response to the Gaza conflict, the Houthis of Yemen said that they would attack any ships owned by companies doing business with Israeli ports regardless of the nationality of the owners. (Reporting and editing by Christian Schmollinger; Florence Tan is the reporter)
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Beijing evacuates 4,000 people as rains increase
Authorities said that heavy rains intensified in Beijing and other provinces of northern China, increasing the risk of disasters such as landslides, flooding and mudslides. They also relocated over 4,000 people. CCTV reported that flash floods, landslides and massive rains continued to hit the northwest suburb of Miyun, Beijing, causing flash flooding and other problems. Many villages were also affected. In recent years, the north of China has experienced record rainfall, which puts densely-populated cities like Beijing at risk of flooding. Scientists attribute the increase in rainfall in China's normally arid north region to global warming. These storms are part a larger pattern of extreme weather in China caused by the East Asian Monsoon. This has led to disruptions for the second largest economy of the world. CCTV reported on Monday that Xiwanzi Village, in Shicheng Town near Miyun Reservoir was severely affected. An additional 100 villagers were transferred to a school as shelter. Beijing authorities announced on Sunday that the peak flood flow in the Miyun Reservoir had reached a new record of 6550 cubic metres per second. Videos from the state media in Shanxi Province, a neighbouring province, showed roads submerged by strong currents. The People's Daily reported that authorities are conducting search and rescue operations in cities across China, including Datong. A driver of a Ford vehicle lost contact with his car while driving through the floods. China's Water Resources Ministry issued flood warnings for 11 provinces, including Beijing and the neighbouring Hebei region, due to small and midsize river flooding and mountain torrents. CCTV reported on Sunday that two people were missing and two others had died in Hebei Province. Fuping, a city in Baoding's industrial area, received 145 mm (5.8 inches) of rain per hour overnight. Chinese authorities closely watch extreme rainfall and severe floods as they threaten to displacing millions of people and wreck havoc on China’s $2.8 trillion agriculture sector. (Reporting and editing by Michael Perry, Farah master, and the Beijing Newsroom)
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REACTION TO US-EU TRADE DEAL INSTANTLY
Donald Trump, the U.S. president, said that the United States had reached an agreement with the European Union on a deal which includes a 15% duty on EU goods entering the U.S. as well as significant EU purchases of U.S. military and energy equipment. He told reporters that the deal calls for the EU to invest $600 billion into the U.S. The deal follows the U.S. agreement with Japan signed on July 23, which reduced tariffs on imports of autos and other goods, in exchange for $550 billion worth of loans and investments destined for the United States. U.S. Stock Futures rose on Monday. Nasdaq futures were up 0.5%, while S&P futures were up 0.37%. The euro rose 0.16% to $1.1757 and hovered near a three-year high reached earlier in the month. Here are some comments made by the markets on the announcement. COMMENTS: JARROD KERR CHIEF ECONOMIST KIWIBANK AUCKLAND "It's great, I think so. I expected a higher tariff for the EU...I am surprised by this deal. We're usually surprised in the opposite direction, but I believe this deal is positive. The markets also agree. "What we are seeing is quite clearly an administration that wants to grab revenue, grab money, instead of diverting trade." TONY SYCAMORE MARKET ANALYST IG SYDNEY It's a win for Trump. The fact that he was able to reach agreements with Japan and the EU in a matter of a week is a positive step. "Putting all of this together, we have seen what has happened with Japan, the EU and with the talks that will be held between the U.S.A. and China in Stockholm. It really negates the risk of a long-term trade war and the importance the August deadline for tariffs has been significantly diffused." HOLGER SCHMIEDING CHIEF ECONOMIST, BERENBERG BANK LONDON "First, the good news. The crippling uncertainty has largely passed. The deal is manageable for the EU. The equity markets have probably already priced in the majority of this news. The deal appears to be in line with reports that were made last Thursday about a possible deal." "Trump could claim that this asymmetrical deal is a win for him. The outcome is bad, but it's still better than the previous situation before Trump began his trade wars. BRIAN JACOBSEN CHIEF ECONOMIST ANNEX WELL BEING MANAGEMENT BROOKFIELD WISCONSIN "President Trump claimed that the EU trade deal was the largest of all deals. Mexico, China and Canada have bigger trade deals, whether it is imports or exports. This is the biggest deal up until the next." "Settle into an average tariff rate of 20% is better than Liberation Day's tariff rate of 25 percent, but still higher than 2024 tariffs at 2.5%." Tariffs are a tool to make production outside of the U.S. more expensive. One Big Beautiful Bill contains a number carrots to encourage production in the U.S. "It's a risk to see if investing in the U.S. with a stick-and-carrot strategy will work. Sticks tend to hurt immediately, while carrots can take some time to show benefits." HASNAIN MALIK, STRATEGY HEAD, EQUITY RESEARCH TELLIMER DUBAI The headline 15% is a relief to all investors. This includes those who own manufacturing assets in Europe. The devil is in the details, as with any other "deal", such as the one with Japan. Metals are already a confusing area, but this is something that will worry you later. MICHAEL BROWN SENIOR RESEARCHER, PEPPERSTONE LONDON. "The EU will be hit with 15% tariffs which is pretty punitive but it is half of the 30% that they were threatened with. It is also well below the 50% that Trump was throwing around at the beginning of the month, so that is good news." The two obvious reactions you'd expect are an increase in the euro, and an increase in equity futures. "I don't believe that equities, in particular, needed much of an explanation to rally. Now they have one." ERIC WINOGRAD, CHIEF ECONOMIST, ALLIANCEBERNSTEIN, NEW YORK: This is very similar to a deal we made with Japan. We will have to see how long both sides are willing to stick with the agreement. It is comforting from a market standpoint to know that a deal is always better than no deal. RICK MECKLER, PARTNER, CHERRY LANE INVESTMENTS, NEW VERNON, NEW JERSEY: "It is in line with Japan's deal and I expect investors to view it positively, just as they did the Japan agreement." There will be higher tariffs. This may result in more inflation depending on the amount of them that are absorbed by manufacturers and passed on to consumers. (Reporting from Matt Tracy and Caroline Valetkevitch, in New York; Lucy Raitano, Karin Strohecker and Rae Wee, in Singapore; Compilation by Amanda Cooper; Editing and compilation by Alexandra Hudson; Marguerita Choy; Jacqueline Wong.
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Tom Lehrer, mathematician and musical satirist, has died at the age of 97
News reports say that Tom Lehrer, a math prodigy, who was a musical satirist in the 1950s and 60s with his barbed opinions of American political and social life, died at age 97. David Herder, a long-time friend of Lehrer, told The New York Times that Lehrer died on Saturday at his Cambridge, Massachusetts home. The cause of death has not been specified. The career of a revered social critic and musician, Jim Lehrer, began as a mere happy accident. He composed ditties for his classmates at Harvard University. He had a seven-year heyday and produced 37 songs, according to his own account, before returning to teach at Harvard and other colleges. BuzzFeed reported in 2014 that Sir Cameron Mackintosh of Broadway, who produced "Tom Foolery," an revue of Lehrer's songs, said "There has never been anyone else like him." "Of famous songwriters he is probably the only one who... never wanted to become a professional. The work he produced is the best of any great writer. Lehrer, who was liberally inclined, poked holes in culture during the 1950s as the U.S. settled into a post-war complacency. He did so while maintaining a witty, urbane air. His mathematical interests were evident in some of his songs, such as "New Math", which was about subtracting 173 out of 342; and "Lobachevsky," about a 19th century Russian mathematician. However, his more meaty songs were considered by many to be irreverent and shocking. Time magazine grouped him with pioneering comics Lenny Bruce, and Mort Sahl in 1959 as "sicknicks," who "had a personal and highly distressing hostility towards all of the world." "National Brotherhood Week", on the other hand, tackled hypocrisy ("It is only a week long so don't be afraid / Be nice to those who are inferior to yourself"). "Be Prepared", "I Got It from Agnes", and "We Will all Go Together when we Go" were about the darker side of Boy Scout life. The notes accompanying one of Lehrer's albums stated: "If after listening to my songs just one person is inspired to do something bad to a friend or strike a loved-one, then it has all been worth while." ODE TO THE ELEMENTS Thomas Andrew Lehrer was a New Yorker born in 1928. He grew in New York listening to Gilbert and Sullivan and his first work was "The Elements", a recitation the periodic table to a Gilbert and Sullivan song. At 15, he enrolled in Harvard and wrote "Fight Fiercely Harvard", which included the line, "Won't the victory be sweet?" The song was a spoof on the school's fight song. While in graduate school he gathered enough material to record a studio album in Boston. He distributed "Songs By Tom Lehrer" on campus, and the album developed a cult-like following across the country. After serving as a soldier in the U.S. Army between 1955 and 1957, Lehrer started performing live and recording more albums. However, he was losing his enthusiasm for music. In the early 1960s he began to focus more on teaching and working on his unfinished doctorate. Lehrer was a math teacher at Harvard, the Massachusetts Institute of Technology, and the University of California Santa Cruz. He found that math and songwriting were similar. Both require you to fit the pieces together and find a satisfying and appropriate outcome. He said that cultural changes made it impossible to satirize issues like abortion and feminism. He famously quipped "political humor became obsolete after Henry Kissinger received the Nobel Peace Prize in 1973" when the award was presented to the controversial Secretary of State. Lehrer, who has never been married, said that the things he used to find funny are now frightening. In 1982, he said to People magazine: "I feel like a Pompeii resident who is asked for some funny comments about lava." The impact of Lehrer's work lasted for decades after he retired from performing. He was featured frequently on the Dr. Demento syndicated radio show, and in 2010, "Harry Potter's" Daniel Radcliffe wowed a talk-show audience with "The Elements". In 2012, the rapper 2 Chainz used a sample of Lehrer's song "The Old Dope Peddler". (Writing and Editing by Rosalba o'Brien, Marguerita choy)
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Outgunned Europe accepts the least-worst US Trade Deal
The European Union found that it did not have the leverage it needed to force Donald Trump's America to agree to a trade agreement on their terms. So, it signed a deal which it could just about stomach. The agreement reached on Sunday on a 15% tariff blanket after months of standoff is a reality-check on the aspirations for the European Union, a 27-country bloc of countries, to become a power economic able to compete with the United States and China. The cold shower feels all the more refreshing, given that for years the EU has portrayed itself to be a superpower in exports and a champion of rules-based trade. This is both for its own soft power as well as the global economy. The new tariffs that are now being applied will be much more digestible than Trump's threat to impose a 30% "reciprocal tariff" in the next few days. It will keep the economy in a rut, even though it is preventing a recession. The European Central Bank forecasted last month that the two scenarios would result in 0.5-0.9% growth in this year's GDP compared to just 1% if there were no trade tensions. This is a point of landing that was unimaginable just months ago, in the pre Trump 2.0 era. The EU and much of the rest world were accustomed to U.S. Tariffs averaging around 1.5%. Even though Britain and the United States agreed to a 10% baseline tariff in May, EU officials believed they could do more. They were convinced that the EU had the economic weight to stand up to Trump. So, they pushed for a “zero-for zero” tariff pact. After a few fruitless weeks of talks with their U.S. colleagues, the Europeans finally accepted that 10% was all they could hope for and it took them a couple more weeks to agree to the same baseline of 15% as the United States did with Japan last Thursday. One senior official who was briefed in a European city on the negotiations last week as they were closing in at around 15% said: "The EU doesn't have more leverage than America, and the Trump Administration isn't rushing things." This official, along with others, pointed out the pressure coming from Europe's export oriented businesses to clinch a contract and ease the level of uncertainty that is starting to affect businesses like Nokia in Finland and SSAB in Sweden. "We got a bad deal." One EU diplomat said that this deal was the best play possible under the circumstances. Recent months have shown clearly how damaging uncertainty on global trade can be for European businesses. What now? The final agreement reflects this imbalance, or "asymmetry", as the trade negotiators call it. The EU has not only promised to invest $600 billion in the United States, but also renounce any retaliation. As yet, the timeframe and other details of this agreement are not defined. The EU concluded that a full-scale confrontation would be more damaging than a series of talks. The total amount of retaliatory actions that were threatened was 93 billion Euros - less than half the U.S. goods surplus of 200 billion euro. It is true that a growing number EU capitals are also prepared to imagine wide-ranging anticoercion measures which would have enabled the bloc to target services trade where the United States enjoyed a surplus in the amount of $75 billion last year. Even then, however, there was not a clear majority in favor of targeting U.S. digital service providers that Europeans enjoy and there are few homegrown alternatives to - such as Netflix, Uber or Microsoft cloud services. The question remains whether the European leaders will be encouraged to speed up their economic reforms and diversifications of trading partners, to which they have long sworn allegiance but have been hindered by national divisions. BGA, the German wholesale and export association, described the deal as an uncomfortable compromise that posed an "existential risk" to many of its members. It was time for Europe's reliance on their biggest trading partner to be reduced. BGA President Dirk Jandura said, "Let's use the last few months as a warning." "Europe needs to prepare for the future strategically - new trade agreements with the largest industrial powers in the world are needed." Mark John, Nick Zieminski and Jan Strupczewski contributed to the reportage in Brussels. Christian Kraemer in Berlin and Maria Martinez were in Berlin.
US and China resume tariff talks to extend truce
Senior U.S.-Chinese negotiators met in Stockholm, Sweden on Monday to discuss longstanding economic issues at the heart of a trade conflict between the two world's largest economies. They aimed to extend a ceasefire that would keep tariffs from rising sharply.
China faces a deadline of August 12 to reach a durable agreement on tariffs with the administration of President Donald Trump, after Beijing reached a preliminary agreement in June. This was to put an end to weeks' worth of escalating tariffs.
If there is no agreement, the global supply chain could be thrown into turmoil by duties of more than 100%.
The Stockholm talks led by U.S. Treasury Sec. Scott Bessent, and Chinese Vice Premier He Lifeng follow Trump's largest trade deal to date, where the European Union agreed to a 15% tariff for its exports to the U.S., and to purchase significant amounts of U.S. military and energy equipment.
Trump said that the deal reached with Ursula von der Leyen, President of the European Commission in Scotland on Sunday also includes $600 billion worth of investments by the EU in the U.S.
There is no similar breakthrough expected in the U.S. - China talks. However, trade analysts believe that another 90-days extension of a truce on tariffs and export controls struck in mid May was likely.
A further extension would help prevent further escalation, and create conditions for a possible meeting between Trump and Chinese president Xi Jinping at the end of October or beginning of November.
The White House and the U.S. trade representative's office have not responded to immediate requests for comments on a
South China Morning Post Report
Unnamed sources claimed that the two sides will refrain from introducing any new tariffs, or taking other steps which could escalate the war of trade for another 90-days.
Trump's administration will soon impose new tariffs on China that will affect semiconductors, pharmaceuticals as well as ship-to shore cranes and many other products.
"We are very close to making a deal with China." "We're very close to a deal with China," Trump said before meeting von der Leyen. He did not provide any further details.
DEEPER ISSUES
The previous U.S.-China talks held in Geneva and London, in May and in June, focused on lowering the U.S. and Chinese tariffs from triple-digit rates and restoring flow of rare-earth minerals that China had stopped and Nvidia H20 AI chips as well as other goods that the United States had stopped.
The talks so far have not covered broader economic topics. The U.S. has complained that China's export-driven, state-led model floods the world's markets with cheap products, while Beijing complains that U.S. export controls on technology goods are meant to stunt Chinese economic growth.
Bo Zhengyuan of China's consultancy firm Plenum, a Shanghai-based partner, said that Stockholm will be the first meaningful U.S. China trade talks.
Trump has succeeded in getting other trading partners to accept higher U.S. Tariffs, such as Japan, Vietnam, and the Philippines.
Analysts believe that the U.S. and China negotiations will take more time because they are more complex. China's hold on the global rare earth mineral and magnet market, which is used in everything from car windshield wiper motors to military hardware, has proven to be a powerful leverage point for U.S. industry.
TRUMP-XI MEETING?
The background to the discussions is speculation regarding a possible Trump-Xi meeting in late October.
Trump said that he would decide in the near future whether to travel to China for a historic trip to resolve trade and security tensions. Any plans to meet with Xi would be derailed by a new flare-up in tariffs and export control.
The Stockholm meeting provides an opportunity to lay the foundation for a Trump China visit, said Wendy Cutler. Vice president of the Asia Society Policy Institute.
Bessent already stated that he would like to extend the deadline of August 12 to avoid tariffs reverting to 145% for the U.S. and 125% for the Chinese.
Analysts said that China would likely ask for a further easing of U.S. export controls on high-tech products and a reduction in the multi-layered U.S. duties totaling 55 percent. Beijing has claimed that these purchases will help reduce the U.S.-China trade deficit, which is expected to reach $295.5 billion by 2024.
China faces a 20% tariff on fentanyl related goods, a reciprocal 10% tariff and 25% duty on industrial goods. These tariffs were imposed by Trump during his first term.
Bessent also stated that he would be discussing with He China's need to rebalance the economy from exports towards domestic consumer demand. China would have to end a long-running property crisis and increase social safety nets in order to encourage spending by households.
Michael Froman, former U.S. Trade Representative during Barack Obama's Administration, said that such a change has been the goal of U.S. Policymakers for 20 years.
Can we use tariffs effectively to force China to change its economic strategy fundamentally? Froman, the president of Council on Foreign Relations' think tank, said that it remains to be determined. Reporting by David Lawder, Additional reporting in Beijing by Laurie Chen; Editing and editing by Helen Popper and Margueritachoy
(source: Reuters)