The main economic officials of the United States and China concluded their first day of meetings in Geneva on Saturday evening, setting up a second day of negotiations high on Sunday which could determine the fate of a global economy which was bordered by the trade war of President Trump.
None of the two parties gave immediate reading on how the talks took place.
Meetings have been the first since Mr. Trump increased prices on Chinese imports to 145% and China retaliated with its own 125% samples from American goods. Tit-for-tat has effectively reduced trade between the world’s largest economies while increasing the possibility of global economic slowdown.
Although the issues of the meetings are high, the expectations for a breakthrough which leads to a significant reduction in the prices is low. It took weeks to China and the United States to even accept to speak, and many analysts expect this weekend’s discussions revolve around the determination of what each party wants and how negotiations could go ahead.
However, the fact that Beijing and Washington is finally talking about raised the hope that the tension between them could be defused and that the prices could ultimately be lowered. The impact of undulating samples from the global economy, redirecting supply chains and forcing companies to transmit additional costs to consumers.
Negotiations will be closely monitored by economists and investors, who fear that an American-Chinese economic war will lead to slower growth and higher prices in the world. Companies, in particular those that depend on Chinese imports, are also on alert on talks because they are content to face new taxes and uncertainty as to whether they will remain in place.
“The United States and China have solid economic and financial interests to defuse their commercial hostilities, but sustainable relaxation is hardly in sight,” said Eswar Prasad, former director of the Chinese division of the International Monetary Fund.
“Nevertheless”, he added, “he represents significant progress that the two parties launch at least high-level negotiations, offering the hope that they will temperate their rhetoric and will withdraw new manifest hostilities on trade and other aspects of their economic relationship.”
Trump administration negotiators are led by Treasury Secretary Scott Bessent, a former hedge fund manager who said the current rate levels were not durable. He will be joined by Jamieson Greer, the US trade representative, who helped design Mr. Trump’s commerce agenda, which included a “phase 1” agreement with China. Mr. Trump’s fellowship advisor Peter Navarro should not participate in the talks.
He Lifeng, Vice-Prime Minister of China’s economic policy, is leading talks on behalf of Beijing. The Chinese government has not confirmed who else would be with HE at meetings or if Wang Xiaohong, Chinese Minister of Public Security, who directs his drug control commission, will assist. Mr. Wang’s participation would be a sign that the two parties could discuss Mr. Trump’s concerns about China’s role by helping fentanyl to circulate in the United States.
The commercial struggle began to wreak havoc on the biggest economies in the world. On Friday, China said that its exports to the United States in April fell 21% compared to the previous year. Some of the largest American companies have said that they should increase prices to deal with prices, reducing Trump’s promise to “end” inflation.
Trump said on Friday that he was ready to start reducing prices, suggesting that an 80% rate on Chinese imports seemed appropriate. Later in the day, referring to commercial negotiations in China, Trump said: “We have to do a lot for America.” He added that he would not be disappointed if an agreement was not concluded right away, arguing that not doing business is also a good deal for the United States.
The president also reiterated that he had suggested reducing 80%China prices, adding: “We will see how it works.”
The Trump administration accused China of unjustly subsidizing the key sectors of its economy and flooding the world of cheap products. The United States has also put pressure on China to take more aggressive measures to limit exports of precursors for fentanyl, a drug that killed millions of Americans.
China was firm saying that it does not intend to make commercial concessions in response to Mr. Trump’s prices. Officials insisted that the nation agreed to engage in talks at the request of the United States.
“This pricing war was launched by the American team,” Liu Pengyu, spokesperson for the Chinese embassy in Washington, this week. “If the United States really wants a negotiated solution, it should stop doing threats and losing pressure, and engaging in talks with China on the basis of equality, mutual respect and mutual benefits.”
A price of 80%, while a sharp drop compared to the current 145%, would most likely close most of the exchanges between countries.
China and the United States could take other concrete gestures to help open the way for future negotiations, other experts said.
An option would be to reduce prices to around 20%, where they were in early April before Mr. Trump announced 34% of samples from goods from China and mutual reprisals followed, Wu Xinbo, the dean of the Institute of International Studies at Fudan University in Shanghai said.
“If we can come back to this stage, I think it will be a major progress to lead to more constructive negotiations,” said Mr. Wu.
He said China was ready to talk about fentanyl as a separate problem, adding that China had proposed to sit with Trump administration in February after Trump announced its intention to impose prices on Chinese products, citing the flow of illegal fentanyl in the United States.
The United States and China meet near the headquarters of the World Trade Organization, which has strongly criticized Mr. Trump’s tariff wars. The group has planned that the continuous division of the global economy in “rival blocks” could reduce the global domestic product by almost 7% in the long term, harming in particular to the poorest countries in the world. A WTO spokesperson said he had greeted talks like a step towards de-escalation.
The alternative – a world in which the United States and China no longer engage in trade – could be economically painful and destabilizing. American consumers, who came to count on cheap products from China, could soon face barely supplied store shelves and high prices for the remaining products.
The National Federation of Retail said on Friday that traffic importation of goods in the United States is expected to decrease this year for the first time since 2023, when the supply chain problems were persistent and attributed the decline to Mr. Trump’s prices.
“We are starting to see the real impact of President Trump’s prices on the supply chain,” said Jonathan Gold, vice-president of the supply chain and customs of the retail federation. “In the end, these prices will affect consumers in the form of higher prices and less availability on store shelves.”
The Trump administration concluded trade agreements with 17 other major trade partners after the president’s decision to suspend the reciprocal prices he announced in April. Friday, he praised a preliminary agreement with Great Britain as proof that his pricing strategy worked.
Economists have been encouraged by the signs that the White House seems ready to reduce prices.
“This precipitation to demonstrate progress in the ‘transactions” reveals an increasing despair within the administration to retreat the prices before hitting the growth and inflation of GDP,” wrote Paul Ashworth, head of the economist in North America for the economy of capital, in a note to customers. “With the crisis of incoming containers in China, raising fears of imminent shortages in the United States, the pressure is based on Trump administration to defuse this price accumulation.”
Capital Economics estimates that if the United States reduced its prices on China to 54%, the overall effective rate of imports to the United States would fall to 15%against 23%. This would reduce its growth and inflation forecasts in accordance with its earlier estimates this year which were based on the campaign promises of Mr. Trump.
It is not yet known if Mr. Trump would accept a rate rate of 54%.
On Friday, he suggested that he was ready to lower the prices to 80% when he gave Mr. Bessent the power to conclude an agreement.
“The 80% price on China looks right!” Until Scott B., ”wrote Mr. Trump on Truth Social, his social media platform.
Later in the day, his press secretary, Karoline Leavitt, said that the figure of 80% was not an official offer and was instead “a number that the president launched there”. She added that Mr. Trump would not reduce prices on China, unless Beijing also reduces his samples.
