^{Photo: Bloomberg.com}

Renewed Push for Trade Breakthrough

U.S. and Chinese trade negotiators have resumed a critical round of talks in Madrid, as a Wednesday deadline looms for ByteDance-owned TikTok to secure approval to continue operating in the United States. The meetings mark the fourth major bilateral trade session in just four months, reflecting intensifying efforts to de-escalate tensions between the world’s two largest economies.

Leading the discussions are U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, alongside China’s Vice Premier He Lifeng and top trade envoy Li Chenggang. Day one focused on a wide spectrum of issues, including tariffs, export controls, and the future of TikTok.

TikTok at the Center of the Talks

Washington has demanded that TikTok’s U.S. operations be divested from Beijing-based ByteDance over national security concerns, citing risks related to data access and content algorithms. Bessent said progress was made on “technical details” regarding a possible agreement, but stressed the U.S. will not “sacrifice national security for a social media app.”

China has placed TikTok’s core recommendation algorithm on its export-control list, which means any sale would require Beijing’s approval—a step it has so far resisted. The Biden administration has extended TikTok deadlines three times this year, but Trump has set a firm Wednesday cutoff, raising the stakes dramatically.

Market strategists say Beijing might be willing to accept U.S. conditions on TikTok if it results in the U.S. cutting tariffs by 10% or more, as suggested by Evercore ISI’s lead China strategist Neo Wang.

Tariffs, Tech Restrictions, and Mounting Frictions

While TikTok grabs headlines, both sides are also tackling broader trade barriers. Since May, they have worked to pause and partially roll back the steep tariffs imposed during the previous trade war, but progress has been slow. The talks follow Li Chenggang’s recent trip to Washington, which ended without major breakthroughs.

Meanwhile, tensions escalated just days before the Madrid summit:

• China launched two investigations into the U.S. semiconductor industry, including an anti-dumping probe targeting American-made analog chips and an anti-discrimination review of U.S. restrictions on Chinese chipmakers.
• The U.S. added 23 Chinese companies to its entity list last Friday, tightening export restrictions on advanced technology.
• On Monday, China’s market regulator said Nvidia violated anti-competition laws during its 2020 acquisition of Israeli tech firm Mellanox, signaling more scrutiny of U.S. chip firms in China.

Trade experts like Wendy Cutler of the Asia Society Policy Institute warn that these retaliatory measures make it difficult to improve relations, saying Beijing will likely “drive a hard bargain” during Trump’s second term and seek concessions before lifting any new restrictions.

Possible Trump-Xi Summit on the Horizon

Amid the tense negotiations, officials are also expected to discuss a potential meeting between President Trump and President Xi Jinping later this year. According to reports, Beijing has been pushing for a Trump state visit to China—the first since 2017—as part of a broader effort to reset ties.

Trump told reporters Sunday that the talks were “going fine” but made clear that TikTok’s fate depends on Beijing’s actions in the coming days.