U.S. and China Meet in Madrid to Discuss Trade Issues

U.S. and Chinese officials are set to meet in Madrid this today to address longstanding trade tensions, including a looming divestiture deadline for the Chinese short video app TikTok and demands from Washington that G7 and European allies impose tariffs on China to curtail its purchases of Russian oil.

This meeting marks the fourth encounter in four months between U.S. Treasury Secretary Scott Bessent, U.S. Trade Representative Jamieson Greer, and Chinese Vice Premier He Lifeng, taking place in various European cities as they strive to prevent the already fragile U.S.-China trade relationship from deteriorating further under President Donald Trump’s tariffs.

The last meeting occurred in Stockholm in July, where the officials agreed in principle to extend a trade truce for an additional 90 days. This truce had significantly reduced retaliatory tariffs on both sides and reinstated the flow of rare-earth minerals from China to the United States. Currently, Trump has approved the extension of existing U.S. tariff rates on Chinese goods, which stand at approximately 55%, until November 10.

Trade experts suggest that a substantial breakthrough is unlikely during the talks hosted by Spain’s Socialist Prime Minister Pedro Sanchez, who has been working to improve relations with Beijing in recent years. The most probable outcome from the Madrid discussions is another extension of the deadline for ByteDance, the Chinese owner of TikTok, to divest its U.S. operations by September 17, or risk facing a shutdown in the U.S. market.

Wendy Cutler, a former USTR trade negotiator and head of the Asia Society Policy Institute in Washington, indicated that more significant “deliverables” may be reserved for a potential meeting between Trump and Chinese President Xi Jinping later this year, possibly at the Asia Pacific Economic Cooperation summit in Seoul at the end of October. These deliverables could include a resolution to U.S. national security concerns regarding TikTok, lifting restrictions on Chinese purchases of American soybeans, and reducing fentanyl-related tariffs on Chinese goods. Cutler emphasized that the Madrid discussions may help lay the groundwork for such a high-level meeting.

However, she cautioned that resolving fundamental U.S. economic grievances with China, particularly the demand for a shift in China’s economic model toward greater domestic consumption and reduced reliance on state-subsidized exports, could take years. “Frankly, I don’t think China is in any rush to agree to terms without substantial concessions on export controls and lower tariffs, which are their key priorities,” Cutler noted. “And I don’t see the United States in a position to make major concessions on either unless there’s a breakthrough in its demands.”

Russian Oil Pressure

The Treasury has indicated that the Madrid talks will also address joint U.S.-Chinese efforts to combat money laundering, particularly concerning illicit shipments of technology goods to Russia that support its war in Ukraine. Bessent urged Group of Seven (G7) allies on Friday to impose “meaningful tariffs” on imports from China and India to pressure these nations to halt their purchases of Russian oil. This initiative aims to curb Moscow’s oil revenues and encourage peace negotiations regarding Ukraine.

Following discussions among G7 finance ministers on Friday, there was consensus to expedite talks on utilizing frozen Russian assets to support Ukraine’s defense. Both Bessent and Greer emphasized the need for G7 allies to collaborate with the United States in imposing tariffs on buyers of Russian oil. “Only with a unified effort that cuts off the revenues funding Putin’s war machine at the source will we be able to apply sufficient economic pressure to end the senseless killing,” they stated, referring to Russian President Vladimir Putin.

While the U.S. has already imposed an extra 25% tariff on Indian goods due to the country’s purchases of Russian oil, it has yet to enact similar punitive measures on Chinese goods. China’s Ministry of Commerce has remarked that the Madrid discussions will cover economic and trade issues, including U.S. tariffs, the “abuse” of export controls, and TikTok.

Spain

The Spanish government is keen to maximize visibility for these talks. Spanish Foreign Minister José Manuel Albares will officially welcome both delegations before discussions commence at 1:50 p.m. local time at the baroque Palacio de Santa Cruz, which houses Spain’s foreign ministry.

A Spanish official noted that choosing Madrid for this delicate round of negotiations underscores Spain’s role as a hub for high-level strategic discussions. The government has also expressed interest in hosting an international peace conference aimed at resolving the Israel-Palestinian conflict. Additionally, this meeting provides an opportunity for Spain to strengthen its bilateral relations with the U.S. following a series of tense interactions with the Trump administration over its criticism of Israel’s actions in Gaza and its reluctance to commit to spending 5% of its budget on defense alongside other NATO members.

Bessent has previously criticized Sanchez for declaring Beijing a “strategic partner” during Trump’s tariff initiatives in April, arguing that fostering closer ties with China was akin to “cutting your own throat.”