The trade war, which rocked the global economy earlier this year, has stabilized relations after a series of temporary truces. The most recent suspension of U.S. tariffs on Chinese imports expires in November, putting pressure on both sides to prevent a backsliding in bilateral relations.
U.S. inflation remains high, fueled by Trump's tariffs. The Federal Reserve is expected to cut interest rates this week, a move aimed at stimulating economic growth but also likely to push up inflation. The U.S. negotiators are being led by Treasury Secretary Scott Bessant and U.S. Trade Representative Jamison Greer, while the Chinese delegation is being led by Vice Premier He Lifeng, who oversees economic policy.
A statement from the Ministry of Finance said the talks will focus on "national security, economic and trade issues of mutual concern, including TikTok, and cooperation to combat money laundering networks that pose a threat to both the United States and China." Xinhua, China's state news agency, reported that the two countries will discuss economic and trade issues including "unilateral U.S. tariffs, abuse of export controls, and TikTok."
Trump must decide by Wednesday whether to enforce or delay a law requiring TikTok to divest from its Chinese parent company, ByteDance, or face a ban in the United States.
The president has previously delayed the law three times. Bipartisan legislation passed by Congress last year, due to concerns that TikTok's ties to China posed a threat to U.S. national security, would have banned TikTok from operating in the United States unless it found non-Chinese owners.
Negotiations are expected to continue until Monday or Tuesday. Bessant is scheduled to accompany Trump on a state visit to London on Wednesday.
Officials from various countries have been working to reach a trade deal with the United States since Trump imposed "reciprocal" tariffs on nearly all U.S. trading partners in April.
Negotiations with China have been more complicated. Trump imposed a 145% tariff on Chinese imports in April, nearly halting trade between the two countries, before later reducing the rate to 30%. China responded with a 10% tariff on U.S. products.
On Saturday, China announced an investigation into exports of some U.S.-made chips. The day before, the U.S. Commerce Department added Chinese chip companies to a trade blacklist. These moves are expected to further increase negotiating pressure. The world's two largest economies continue negotiations on further reducing tariffs and restricting Chinese exports of rare earth minerals and magnets, which are vital to American manufacturers. The Trump administration is also concerned about China halting purchases of American agricultural products, a move that threatens the livelihoods of soybean farmers.
Bessant criticized China's industrial overcapacity, calling its economy unbalanced, and urged Chinese officials to reduce oil purchases from Russia and Iran.
Trump and Chinese leader Xi Jinping are likely to meet at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea next month. Trump has also hinted that he might visit China at Xi's invitation.
The current round of talks comes shortly after Xi convened a delegation of more than 20 world leaders for a visit to China last month to demonstrate Beijing's commitment to reshaping a global order less centered on the United States. Trump's tough tactics in trade negotiations have already strained relations with allies such as India, which has become a target of Trump's high import tariffs, creating an opportunity for China to promote closer ties with India.
China is offsetting a sharp decline in exports to the United States by expanding trade growth with other countries. Chinese exports to the United States have fallen by about 15% this year, but trade with Southeast Asia, Africa, and other regions is growing rapidly. On current trends, China is expected to surpass last year's record trade surplus of nearly $1 trillion by 2025.
Despite the strong trade data, there are also signs that China's domestic economy is feeling the pinch from the ongoing trade war. The Chinese government is discouraging companies from further investment in sectors already experiencing overcapacity to prevent unhealthy price competition and alleviate concerns among trading partners that a flood of cheap Chinese-made exports will cripple their domestic manufacturing sector.
