By Eric Vandenbroeck and co-workers

United States and China Business

Senior U.S. and Chinese negotiators are gearing up for high-stakes trade talks in Switzerland on Saturday. De-escalating the trade war is a top priority for both Team Trump (represented by U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer) and Chinese Vice Premier He Lifeng, Beijing’s top economic official. But with neither side willing to lose face in negotiations, the likelihood that Saturday’s dialogue culminates in a trade agreement remains low.

“My sense is that this will be about de-escalation, not about the big trade deal,” Bessent told Fox News on Tuesday. Chinese Foreign Ministry spokesperson Lin Jian wrote on Wednesday that “China is open to dialogue, but any dialogue must be based on equality, respect and mutual benefit.”

A lot is riding on Saturday’s talks between the world’s two largest economies. On Friday, new Chinese customs data indicated that Chinese global exports grew 8.1 percent in April compared to the previous year despite Trump imposing sweeping tariffs last month. This unexpectedly strong performance represents a setback for Washington, as it strengthens Beijing’s hand ahead of negotiations and demonstrates that China’s recent efforts to court trade elsewhere have worked. Beijing has diverted trade flows to the Indo-Pacific and Europe, with the largest increases in outbound shipments going to Indonesia, Thailand, and Vietnam.

Trump, however, is hoping that his hard-line playbook will bolster U.S. negotiating power. On Wednesday, for instance, Trump said he was not willing to lessen U.S. duties on China (currently totaling 145 percent for most goods) even if doing so would help jump-start negotiations. Yet just two days later, he seems to have changed his tune, suggesting on Friday that he would be willing to cut U.S. duties. “80% Tariff on China seems right!” he wrote on Truth Social. Chinese retaliatory tariffs sit at 125 percent.

In Geneva, the Trump negotiating team is expected to focus on getting China to decrease nontariff barriers to U.S. exports. This would echo a similar strategy used during Trump’s first term, when he stipulated that Beijing must buy an additional $200 billion in U.S. exports over 2020 and 2021. China fell short of these levels, though, and Bessent told Fox News that the White House is prepared to take Beijing’s past noncompliance into account when negotiating new trade deals.

Saturday’s talks follow a week of U.S. trade negotiations around the world, with varying levels of success. On Thursday, Trump reached a trade framework with British Prime Minister Keir Starmer that would reduce most tariffs and allow for greater access to each other’s markets. That same day, though, the European Union published a list of U.S. imports that it plans to target with retaliatory duties if Trump does not end his trade war, and the European Commission said it would begin legal action at the World Trade Organization to challenge the so-called reciprocal tariffs that Trump announced last month.

Meanwhile, Reuters reported on Friday that India has offered to cut its tariff gap with the United States from nearly 13 percent to less than 4 percent in exchange for U.S. tariff exemptions. This would reduce the two countries’ average tariff differential, calculated across all products without weighting for trade volume, by 9 percentage points.

“Many Trade Deals in the hopper, all good (GREAT!) ones!” Trump wrote on Truth Social on Friday.

Markets, multinational companies, and scriptwriters alike must be thrilled that Trump administration officials and representatives of Chinese leader Xi Jinping will be meeting this weekend in Geneva to talk tariffs and trade. It’s an occasion for both drama and irony: They will be gathering in the shadow of the World Trade Organization, the world’s preeminent protector of free trade, which both countries have thoroughly undermined—China through its massive industrial policy machine, Washington through its dismissive abandonment.

The stakes could not be higher. Bilateral U.S.-China trade in goods and services was $660 billion in 2024. Thousands of U.S. multinationals in China and Chinese firms in the United States do another $600 billion in business from their overseas homes. There are 286 Chinese companies on the three major U.S. stock exchanges, with a combined market cap of $1.1 trillion. This commerce acts as the circulatory system, sustaining millions of jobs, complex innovation ecosystems, and affordable lifestyles.

 

 

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