Attention shifts to U.S.-China tariffs after TikTok deal 'framework' agreed

U.S. and Chinese trade negotiations concluded in Spain Monday, after two days of talks on several sticking points ranging from tariff rates, export controls and the imminent deadline for a divestment of Chinese-owned TikTok.

The two countries reached a "framework" deal regarding the social media platform, Treasury Secretary Scott Bessent said Monday.

"It's between two private parties, but the commercial terms have been agreed upon," he said from U.S.-China talks in Madrid. Both President Donald Trump and Chinese President Xi Jinping will meet Friday to discuss the terms.

The news comes ahead of a Wednesday deadline to either divest TikTok's U.S. business or shut down the social media app in the country.

Bessent led negotiations alongside Trade Representative Jamieson Greer on the U.S. side, with the Chinese represented by Vice Premier He Lifeng and top trade negotiator Li Chenggang.

The meetings in Madrid mark the fourth round of bilateral meetings in four months, after both sides reached an agreement in May to pause most of the steep tariffs and walk back some of their mutual restrictions. A trip to Washington by Chinese senior trade negotiator Li Chenggang last month yielded little progress.

Tensions between the countries have ramped up in recent days. Over the weekend, China launched two investigations targeting the U.S. semiconductor industry, including an anti-dumping probe relating to certain American-made analog IC chips, along with an anti-discrimination investigation into U.S. moves against the Chinese chip sector.

The investigations were kicked off after the U.S. added 23 more China-based companies to its entity list last Friday.

On Monday, China's market regulator said that a preliminary investigation found Nvidia was in violation of the country's anti-competition laws, adding that a further probe into the U.S. chip giant will be carried out.

After the end of the talks Monday, Bessent described the Nvidia investigation announcement as "poor timing."

Nvidia has become "a leverage for both sides," with the extended probe as "clearly part of negotiation tactics run by Beijing to show its tough side to Washington," said George Chen, partner of digital practice at business advisory The Asia Group.

The barbs exchanged ahead of the Madrid rapprochement were "not encouraging," said Wendy Cutler, a former U.S. trade representative and head of the Asia Society Policy Institute in Washington, adding that China was "going to drive a hard bargain" in Trump's second mandate and likely demand some compensation in exchange for lifting these new measures.

Cutler pointed out that Beijing had managed to get Washington to remove certain controls on exports of tech equipment to China, after it tightened exports of critical minerals and magnets to the U.S.

"With this approach, [it's] hard to see how the bilateral economic relationship improves. More like running to [a] stand-still," Cutler said.

Separately, China's Ministry of Commerce in a statement pushed back against Trump's request for the European Union to impose secondary tariffs of up to 100% on China over the country's purchases of Russian oil.

This was "a classic act of unilateral bullying and economic coercion" and "a severe violation of the consensus reached" during a call between Trump and Xi earlier this year, a spokesperson for the ministry said in the statement, vowing to take "any necessary measure" to defend Beijing's legitimate interests.

Officials were also expected to discuss details of a potential face-to-face meeting between Trump and his Chinese counterpart Xi Jinping later this year. The Wall Street Journal reported Sunday that Beijing has for the past two months sought to broker a Trump visit to China, what would be the U.S. president's first state visit to the country after a trip in 2017.

— CNBC's Evelyn Cheng contributed to the report.