Top US and Chinese economic officials will resume talks in Stockholm on Monday to try to tackle longstanding economic disputes at the centre of a trade war between the world’s top two economies, aiming to extend a truce by three months and keep sharply higher tariffs at bay.

The negotiations will begin on Monday afternoon local time at Rosenbad, the Swedish prime minister’s office in central Stockholm, a source familiar with the planning of the talks said. Chinese and US national flags were being raised at the building on Monday morning.

China is facing an August 12 deadline to reach a durable tariff agreement with President Donald Trump’s administration, after Beijing and Washington reached preliminary deals in May and June to end weeks of escalating tit-for-tat tariffs and a cut-off of rare earth minerals.

Without an agreement, global supply chains could face renewed turmoil from US duties snapping back to triple-digit levels that would amount to a bilateral trade embargo.

The Stockholm talks come hot on the heels of Trump’s biggest trade deal yet with the European Union on Sunday for a 15% tariff on most EU goods exports to the US, including autos.

No similar breakthrough is expected in the US-China talks but trade analysts said that another 90-day extension of a tariff and export control truce struck in mid-May was likely.

An extension of that length would prevent further escalation and facilitate planning for a potential meeting between Trump and Chinese President Xi Jinping in late October or early November.

A US Treasury spokesperson declined comment on a South China Morning Post report quoting unnamed sources as saying the two sides would refrain from introducing new tariffs or other steps that could escalate the trade war for another 90 days.

Trump’s administration is poised to impose new sectoral tariffs that will impact China within weeks, including on semiconductors, pharmaceuticals, ship-to-shore cranes and other products.

“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 told reporters on Sunday before European Commission President Ursula von der Leyen struck their tariff deal.

The Financial Times reported on Monday that the US had paused curbs on tech exports to China to avoid disrupting trade talks with Beijing and support Trump’s efforts to secure a meeting with Xi this year.

The industry and security bureau of the Commerce Department, which oversees export controls, had been told to avoid tough moves on China, the newspaper said, citing current and former officials.

Reuters could not immediately verify the report. The White House and the department did not respond to Reuters’ requests for comment outside business hours.

TRUMP-XI MEETING?

In the background of the talks is speculation about a possible meeting between Trump and Xi in late October.

Trump has said he will decide soon on a landmark trip to China, and a new flare-up of tariffs and export controls would likely derail planning.

Sun Chenghao, a fellow at Tsinghua University’s Centre for International Security and Strategy in Beijing, said that a Trump-Xi summit would be an opportunity for the US to lower the 20% tariffs on Chinese goods related to fentanyl. In exchange, he said the Chinese side could make good on its 2020 pledge to increase purchases of US farm products and other goods.

“The future prospect of the heads of state summit is very beneficial to the negotiations because everyone wants to reach an agreement or pave the way in advance,” Sun said.

Still, China will likely request a reduction of multi-layered US tariffs totalling 55% on most goods and further easing of US high-tech export controls, analysts said. Beijing has argued that such purchases would help reduce the US trade deficit with China, which reached $295.5 billion in 2024.