U.S. and Chinese officials entered a second day of high-level talks in Stockholm on Tuesday, aiming to ease longstanding economic tensions and avoid a renewed escalation of their trade war.

While a major breakthrough is not expected, both sides may agree to a 90-day extension of the tariff truce first agreed in May, potentially setting the stage for a future meeting between Presidents Donald Trump and Xi Jinping though Trump on Tuesday denied actively seeking one.

Talks resumed at Sweden’s Rosenbad, the prime minister’s office, where delegations met for more than five hours the previous day. U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng were seen arriving at the venue on Tuesday, but neither side issued statements after Monday’s session.

The urgency is growing as China faces an 12 August deadline to finalise a deal with the U.S. before punitive tariffs, temporarily halted earlier this year snap back into place. A failure to reach an agreement could trigger triple-digit U.S. tariffs, severely disrupting global supply chains and trade.

These Stockholm talks come on the heels of Trump securing significant trade deals with the EU and Japan, including a 15% tariff pact with Brussels.

Meanwhile, the Financial Times reported that the U.S. has temporarily eased tech export controls on China to avoid derailing negotiations and to support Trump’s potential meeting with Xi.

Trump, however, pushed back on speculation, saying on Truth Social: “I am not SEEKING anything! I may go to China, but only at the invitation of President Xi, which has been extended. Otherwise, no interest!”

Complicating matters, U.S. lawmakers are preparing bipartisan legislation targeting China’s policies on Taiwan, human rights, and dissent issues likely to raise tensions during trade talks.

In response, Taiwan’s President Lai Ching-te is reportedly postponing a planned U.S. visit to avoid fuelling further friction.

Earlier U.S.-China talks in Geneva and London helped de-escalate retaliatory tariffs and address trade halts on key goods such as rare earth minerals and Artificial Intelligence (AI) chip exports. However, deeper structural disagreements remain. The U.S. accuses China of distorting global markets through its state-backed, export-heavy economic model, while China criticises Washington’s security-based restrictions on advanced technologies.

Treasury Secretary Bessent has previously supported extending the deadline and reiterated Washington’s long-standing position that Beijing should shift its economy toward greater domestic consumption.

Analysts caution that U.S. and China trade negotiations are far more complex than other regional deals, given China’s dominance in areas such as rare earths—critical components in defence systems and advanced manufacturing—making this dialogue a strategic and prolonged challenge.

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