The U.S. and China flags stand behind a microphone at the U.S. Embassy in Beijing on April 9, 2009.
Frederic J. Brown | AFP | Getty Images
In a significant diplomatic engagement, U.S. and Chinese officials convened in Madrid on Sunday to address persistent trade tensions and pressing economic issues. This meeting comes at a critical juncture, with a looming deadline for the Chinese short video app TikTok, owned by ByteDance, to divest its U.S. operations, and U.S. demands for G-7 and European allies to impose tariffs on China to curb its purchases of Russian oil.
This marks the fourth meeting in four months between U.S. Treasury Secretary Scott Bessent, U.S. Trade Representative Jamieson Greer, and Chinese Vice Premier He Lifeng, as they strive to stabilize a fraught U.S.-China trade relationship that has been strained under the weight of tariffs imposed during the Trump administration.
During their last meeting in Stockholm in July, the officials reached a tentative agreement to extend a trade truce for 90 days, which had previously reduced retaliatory tariffs and resumed the flow of rare-earth minerals from China to the U.S. However, the current landscape remains complex, with President Trump extending existing tariffs on Chinese goods, which now average around 55%, until November 10.
Challenges Ahead
Experts are skeptical about the potential for significant breakthroughs during the Madrid discussions, hosted by Spain’s Socialist Prime Minister Pedro Sanchez, who has been working to enhance relations with Beijing. The most anticipated outcome appears to be yet another extension of the deadline for TikTok’s divestiture, which is set for September 17. This would mark the fourth extension since Trump took office in January.
A source familiar with the administration’s discussions indicated that while a deal is unlikely, the public inclusion of TikTok in the agenda provides political cover for another extension. This move may not sit well with both Republican and Democratic lawmakers who have pushed for the app’s sale to mitigate national security concerns.
Wendy Cutler, a former USTR trade negotiator and current head of the Asia Society Policy Institute, suggested that more substantial agreements might 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 in late October. These discussions could pave the way for resolving U.S. national security concerns regarding TikTok, lifting restrictions on Chinese purchases of American soybeans, and reducing tariffs on fentanyl-related goods.
However, Cutler cautioned that addressing core U.S. economic grievances with China, such as the need for China to shift its economic model towards domestic consumption and reduce reliance on state-subsidized exports, could take years. “China is unlikely to rush into an agreement that does not yield substantial concessions on export controls and lower tariffs, which are their primary concerns,” she noted.
Geopolitical Context: Russian Oil and Economic Pressure
The Madrid talks also encompass discussions on joint U.S.-Chinese efforts to combat money laundering, particularly concerning illicit technology shipments to Russia that support its ongoing war in Ukraine. Bessent has urged G-7 allies to impose “meaningful tariffs” on imports from China and India to pressure these nations to halt their purchases of Russian oil, a strategy aimed at diminishing Moscow’s revenue and compelling it to engage in peace negotiations regarding Ukraine.
In a recent statement, Bessent and Greer emphasized the necessity of a unified approach to cut off the financial resources fueling President Vladimir Putin’s military actions. While the U.S. has already imposed a 25% tariff on Indian goods due to its purchases of Russian oil, it has yet to apply similar punitive measures to Chinese imports.
China’s Ministry of Commerce has confirmed that the Madrid discussions will address various economic and trade issues, including U.S. tariffs, the “abuse” of export controls, and the TikTok situation.
Spain’s Strategic Role
The Spanish government is keen to maximize the visibility of these high-stakes talks. Spanish Foreign Minister José Manuel Albares is set to publicly welcome both delegations at the Palacio de Santa Cruz, the seat of Spain’s foreign ministry. This choice of venue underscores Madrid’s ambition to position itself as a hub for high-level international negotiations.
Spain has also expressed interest in hosting an international peace conference to address the Israel-Palestinian conflict, further solidifying its role in global diplomacy. A source from the Spanish government indicated that hosting these talks serves to strengthen bilateral relations with the U.S., especially following a series of tense interactions with the Trump administration over issues such as Israel’s military actions in Gaza and Spain’s defense spending commitments to NATO.
Interestingly, Bessent has previously criticized Sanchez for labeling Beijing a “strategic partner” during a time of heightened tensions due to Trump’s tariff policies, suggesting that such a relationship could be detrimental to Spain’s interests.
Conclusion
The Madrid talks represent a crucial moment in U.S.-China relations, as both nations grapple with complex economic and geopolitical challenges. While the likelihood of immediate breakthroughs appears slim, the discussions may lay the groundwork for future negotiations, particularly in light of the upcoming APEC summit. As the global landscape continues to evolve, the outcomes of these talks could have far-reaching implications for international trade, security, and diplomatic relations.
