U.S. and
China Meet for High-Stakes Economic Talks
The outcome
of the trade negotiations could determine the trajectory of the global economy.
Alan
Rappeport Ana Swanson Alexandra Stevenson
By Alan
Rappeport Ana Swanson and
Alexandra Stevenson
Alan
Rappeport and Ana Swanson reported from Washington, and Alexandra Stevenson
from Hong Kong.
https://www.nytimes.com/2025/05/10/business/us-china-talks-trump-tariffs.html
May 10,
2025, 12:01 a.m. ET
Top economic
officials from the United States and China are poised to meet in Geneva on
Saturday for high-stakes negotiations that could determine the fate of a global
economy that has been jolted by President Trump’s trade war.
The
meetings, scheduled to continue on Sunday, will be the first since Mr. Trump
ratcheted up tariffs on Chinese imports to 145 percent and China retaliated
with its own levies of 125 percent on U.S. goods. The tit-for-tat effectively
cut off trade between the world’s largest economies while raising the
possibility of a global economic downturn.
While the
stakes for the meetings are high, expectations for a breakthrough that results
in a meaningful reduction in tariffs are low. It has taken weeks for China and
the United States to even agree to talk, and many analysts expect this
weekend’s discussions to revolve around determining what each side wants and
how negotiations could move forward.
Still, the
fact that Beijing and Washington are finally talking has raised hopes that the
tension between them could be defused and that the tariffs could ultimately be
lowered. The impact of the levies is already rippling across the global
economy, reorienting supply chains and causing businesses to pass additional
costs onto consumers.
The
negotiations will be watched closely by economists and investors, who fear that
a U.S.-Chinese economic war will lead to slower growth and higher prices around
the world. Businesses, particularly those that rely on Chinese imports, are
also on high alert about the talks as they grapple with how to cope with the
new taxes and the uncertainty about whether they will remain in place.
“Both the
U.S. and China have strong economic and financial interests in de-escalating
their trade hostilities, but a durable détente is hardly in the offing,” said
Eswar Prasad, a former director of the International Monetary Fund’s China
division.
“Nevertheless,”
he added, “it represents significant progress that the two sides are at least
initiating high-level negotiations, offering the hope that they will temper
their rhetoric and pull back from further overt hostilities on trade and other
aspects of their economic relationship.”
The Trump
administration’s negotiators are being led by Treasury Secretary Scott Bessent,
a former hedge fund manager who has said the current tariff levels are
unsustainable. He will be joined by Jamieson Greer, the U.S. trade
representative, who helped design Mr. Trump’s first-term trade agenda, which
included a “Phase 1” deal with China. Mr. Trump’s hawkish trade adviser, Peter
Navarro, was not scheduled to participate in the talks.
He Lifeng,
China’s vice premier for economic policy, is leading the talks on behalf of
Beijing. The Chinese government has not confirmed who else will be with Mr. He
at the meetings or if Wang Xiaohong, China’s minister of public security, who
directs its narcotics control commission, will attend. Mr. Wang’s participation
would be a sign that the two sides might discuss Mr. Trump’s concerns about
China’s role in helping fentanyl flow into the United States.
The trade
fight has started to take a toll on the world’s largest economies. On Friday,
China reported that its exports to the United States in April dropped 21
percent from a year earlier. Some of the largest U.S. companies have said they
will have to raise prices to deal with the tariffs, cutting against Mr. Trump’s
promise to “end” inflation.
On Friday,
Mr. Trump signaled that he was prepared to begin lowering tariffs, suggesting
that an 80 percent rate on Chinese imports seemed appropriate. Later in the
day, referring to the China trade talks, Mr. Trump said, “We have to make a
great deal for America.” He added that he would not be disappointed if a deal
was not reached right away, arguing that not doing business is also a good deal
for the United States.
The
president also reiterated that he had suggested lowering the China tariffs to
80 percent, adding, “We’ll see how that works out.”
The Trump
administration has accused China of unfairly subsidizing key sectors of its
economy and flooding the world with cheap goods. The United States has also
been pressuring China to take more aggressive steps to curb exports of
precursors for fentanyl, a drug that has killed millions of Americans.
China has
been steadfast in saying it does not intend to make trade concessions in
response to Mr. Trump’s tariffs. Officials have insisted that the nation agreed
to engage in talks at the request of the United States.
“This tariff
war was launched by the U.S. side,” Liu Pengyu, the spokesman for the Chinese
Embassy in Washington, said this week. “If the U.S. genuinely wants a
negotiated solution, it should stop making threats and exerting pressure, and
engage in talks with China on the basis of equality, mutual respect and mutual
benefit.”
An 80
percent tariff, while a big drop from the current 145 percent, would still most
likely shut off most trade between the countries.
China and
the United States could take other concrete gestures to help pave the way for
future negotiations, other experts said.
One option
would be to scale back tariffs to about 20 percent, where they were in early
April before Mr. Trump announced 34 percent levies on goods from China and
mutual retaliation ensued, said Wu Xinbo, the dean of the Institute of
International Studies at Fudan University in Shanghai.
“If we can
scale back to that stage, then I think it will be a major progress in leading
towards more constructive negotiations,” Mr. Wu said.
He said
China was prepared to talk about fentanyl as a separate issue, adding that
China had offered to sit down with the Trump administration in February after
Mr. Trump first announced plans to impose tariffs on Chinese goods, citing the
flow of illegal fentanyl into the United States.
The United
States and China are meeting in proximity to the headquarters of the World
Trade Organization, which has sharply criticized Mr. Trump’s tariff wars. The
group has forecast that the continued division of the global economy into
“rival blocs” could cut global gross domestic product by nearly 7 percent over
the long run, particularly harming the world’s poorest countries. A spokesman
for the W.T.O. said it welcomed the talks as a step toward 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 have come to rely on cheap goods from China, could soon confront thinly
stocked store shelves and high prices for the products that remain.
The National
Retail Federation said on Friday that import cargo traffic in the United States
is expected to decline this year for the first time since 2023, when supply
chain problems were persistent, and attributed the decline to Mr. Trump’s
tariffs.
“We are
starting to see the true impact of President Trump’s tariffs on the supply
chain,” said Jonathan Gold, the retail federation’s vice president for supply
chain and customs policy. “In the end, these tariffs will affect consumers in
the form of higher prices and less availability on store shelves.”
The Trump
administration has been racing to make trade deals with 17 other major trading
partners after the president’s decision to pause the reciprocal tariffs he
announced in April. On Friday, he hailed a preliminary agreement with Britain
as evidence that his tariff strategy was working.
Economists
have been heartened by signs that the White House appears ready to scale back
tariffs.
“This rush
to demonstrate progress on ‘deals’ reveals a rising desperation within the
administration to roll back tariffs before they hit G.D.P. growth and
inflation,” Paul Ashworth, chief North America economist for Capital Economics,
wrote in a note to clients. “With the slump in incoming container ships from
China raising fears of imminent shortages in the U.S., the pressure is building
on the Trump administration to de-escalate that tariff buildup.”
Capital
Economics estimates that if the United States lowered its tariffs on China to
54 percent, the overall effective tariff rate on imports for the United States
would fall to 15 percent from 23 percent. That would put its growth and
inflation forecasts back in line with its estimates from earlier this year that
were based on Mr. Trump’s campaign pledges.
It remains
unclear whether Mr. Trump would accept a 54 percent tariff rate.
On Friday,
he suggested that he was prepared to lower tariffs to 80 percent as he gave Mr.
Bessent the authority to make a deal.
“80% Tariff
on China seems right! Up to Scott B.,” Mr. Trump wrote on Truth Social, his
social media platform.
Later in the
day, his press secretary, Karoline Leavitt, said that 80 percent figure was not
an official offer and was instead “a number that the president threw out
there.” She added that Mr. Trump would not lower tariffs on China unless
Beijing also reduced its levies.
Alan
Rappeport is an economic policy reporter for The Times, based in Washington. He
covers the Treasury Department and writes about taxes, trade and fiscal
matters.
Ana Swanson
covers trade and international economics for The Times and is based in
Washington. She has been a journalist for more than a decade.
Alexandra
Stevenson is the Shanghai bureau chief for The Times, reporting on China’s
economy and society.
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