US and China Resume Trade Negotiations in Madrid as TikTok Deadline Nears
US and Chinese trade officials have extended their negotiations into a second day in Madrid, focusing on contentious issues such as tariff adjustments, export controls, and the looming deadline for the divestment of Chinese-owned social media platform TikTok. The talks represent the fourth round of bilateral discussions in four months following a May agreement to pause most steep tariffs and ease several restrictions.
Key Figures and Focus Areas
The US delegation is led by Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, while China’s team includes Vice Premier He Lifeng and chief trade negotiator Li Chenggang. Initial discussions centered on TikTok’s future in the US, tariff policies, and broader economic concerns. Despite a recent visit by Li Chenggang to Washington yielding limited progress, negotiators remain engaged in Madrid.
Progress and Security Concerns Over TikTok
Bessent reported constructive progress on technical aspects of the TikTok issue but underscored that the US will not compromise on national security. “Our Chinese counterparts have come with a very aggressive ask,” he said, highlighting the challenge of balancing security with commercial interests. TikTok’s parent company, ByteDance, faces a Wednesday deadline to finalize a deal that would allow it to continue operations in the US amid regulatory scrutiny of its recommendation algorithm.
Escalating Semiconductor Industry Tensions
Trade tensions have intensified as China launched investigations targeting the US semiconductor industry over the weekend. These include an anti-dumping probe concerning American-made analog integrated circuits and an anti-discrimination inquiry related to US measures against the Chinese chip sector. Following the US addition of 23 China-based companies to its entity list, China’s market regulator announced a preliminary anti-competition investigation into Nvidia, signaling a further probe into the US chipmaker.
Analysts interpret these measures as negotiation tactics by Beijing to assert a firm stance in talks with Washington. George Chen, partner at The Asia Group, described Nvidia as “leverage for both sides,” suggesting these probes serve to demonstrate China’s resolve.
Diplomatic and Economic Implications
Wendy Cutler, former US trade representative and head of the Asia Society Policy Institute, noted that the recent exchange of trade-related barbs was “not encouraging” and predicted China would negotiate hard under President Trump’s second term. She highlighted Beijing’s previous success in prompting Washington to relax export controls on tech equipment after China restricted critical minerals exports.
Meanwhile, China’s commerce ministry condemned President Trump’s call for the European Union to impose secondary tariffs on China over Russian oil purchases, labeling it “unilateral bullying and economic coercion” and a breach of earlier agreements between Trump and President Xi Jinping. China has vowed to defend its interests vigorously.
Prospects for a Trump-Xi Meeting
Officials are also expected to discuss the possibility of a state visit by President Trump to China later this year, a potential first since 2017. The outcome of the Madrid talks, particularly regarding TikTok, is likely to influence the feasibility of this meeting. George Chen cautioned that tensions could escalate if either side perceives disrespect during negotiations.
Neo Wang, lead China strategist at Evercore ISI, suggested that Beijing might comply with Trump’s TikTok demands if it facilitates significant tariff reductions. TikTok remains a strategic asset for Trump to appeal to younger American voters.
President Trump described the talks as “going fine,” indicating that TikTok’s fate depends largely on China’s forthcoming actions.
FinOracleAI — Market View
The ongoing US-China trade talks in Madrid, particularly the progress on TikTok and tariff discussions, are likely to have a neutral short-term market impact. While the resolution of TikTok’s status could ease some uncertainties, escalating semiconductor probes and retaliatory investigations add layers of geopolitical risk. Market participants should monitor the outcome of TikTok negotiations and any announcements regarding export controls or additional tariffs.
Risks remain high given the potential for further retaliatory measures from both sides, which could disrupt supply chains, especially in technology sectors. The possibility of a high-profile Trump-Xi meeting could provide a positive catalyst if it signals a de-escalation, but this remains contingent on substantive progress in Madrid.
Investors should watch for official statements post-talks and any shifts in the regulatory environment affecting key industries such as semiconductors and social media platforms.
Impact: neutral
