Trade War Monitor, Sept. 15: China, U.S. Find Common Ground on TikTok in Madrid Talks

[para. 1] A significant turning point has been reached in U.S.-China relations as both countries concluded a framework agreement to allow TikTok to continue operating within the United States. This breakthrough coincides with renewed trade negotiations in Madrid, led by Chinese Vice Premier He Lifeng and U.S. Treasury Secretary Scott Bessent. The talks signify efforts to manage and stabilize the strategic competition between the two superpowers, with the prospect of a leadership summit now looming on the horizon.

[para. 2][para. 3] The current diplomatic engagement reflects an urgent need to prevent further deterioration in economic and political ties. Despite ongoing tariffs initiated during the Trump administration, Chinese exports remain unexpectedly robust, a fact that has triggered criticism from some U.S. economists regarding the efficacy of the tariffs. Former Treasury Secretary Lawrence Summers voiced strong disapproval of these tariffs, labeling them “unwise” and noting the increased costs ultimately burden American consumers. Summers further suggested that innovation, such as advances in artificial intelligence, could provide a better remedy to fiscal and economic challenges than protectionist trade policies.

[para. 4][para. 5][para. 6] The current standoff between the U.S. and China is rapidly shifting the global landscape. Asian countries are seeking refuge from superpower tensions by intensifying regional cooperation, especially through frameworks like the Regional Comprehensive Economic Partnership (RCEP), which encompasses roughly 30% of global GDP and a third of the world’s population. This regionalism aims to foster greater economic integration and provide stability amidst global turmoil.

[para. 7] The aggressive U.S. trade stance is also straining relations with other partners. New tariffs on Indian exports—raised to upwards of 50%—have sparked friction between Washington and New Delhi. In a symbolic display of shifting alliances, Indian Prime Minister Narendra Modi was photographed with Russian President Vladimir Putin, reflecting India’s pursuit of strategic autonomy in response to U.S. hostility. The collapse of bilateral trade talks in July and fresh tariffs have aggravated these tensions.

[para. 8][para. 9][para. 10][para. 11] Parallel to these geostrategic maneuvers, the recent U.S.-China agreement on TikTok is a sign of possible détente. Chinese officials described the Madrid talks as candid, constructive, and aiming to reduce investment and technology sector restrictions. Vice Commerce Minister Li Chenggang reiterated China’s resistance to politicizing trade and stood firm on not sacrificing national or corporate interests. Analysts view the consensus on TikTok as a possible precursor to broader economic accommodation.

[para. 12][para. 13][para. 14][para. 15] At the same time, the economic rivalry remains far from resolved. Kevin Rudd, Australia’s ambassador to the U.S., noted that both nations are mutually motivated to avoid a full-scale breakdown and hope for a “soft landing,” though the outcome is uncertain. He observed that China’s dual circulation economic strategy focuses on boosting domestic demand while maintaining export strength, which presents its own challenges in rebalancing the global economy.

[para. 16][para. 17][para. 18][para. 19] The resilience of Chinese exports has defied expectations, underscoring the importance of overseas market expansion and industrial upgrading for Chinese firms. Despite recent concerns about the sustainability of China’s export surge, fundamentals such as diverse markets and shifts toward high-end manufacturing suggest continued strength in this sector.

[para. 20][para. 21][para. 22] In summary, global economic and political relations are in a state of significant flux, shaped by ongoing U.S.-China disputes, evolving trade policies, and efforts by Asian nations to deepen regional ties. The future trajectory depends on whether constructive agreements, such as the TikTok framework, can provide the necessary foundation to mitigate broader conflicts and trade disruptions.