Following trade talks over the weekend, China and the U.S. agreed to reduce reciprocal tariffs by 115% during a 90-day pause. It is also possible that after further negotiations they will conclude purchasing deals to reduce the U.S. trade deficit with China. The U.S. tariff on imports from China is dropping to 30% (10% basic tariffs applicable to all countries plus 20% separate tariff to punish China for its alleged role in the U.S. fentanyl crisis), while China’s levy on U.S. imports drops to 10%.
A U.S. delegation, including Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, met a Chinese delegation led by Vice Premier He Lifeng in Geneva over the weekend. The face-to-face talks were the first since stratospheric tariff increases brought almost all bilateral goods shipments to a halt. Chinese Vice Premier He Lifeng said the talks were “candid” and “constructive” and that substantive progress had been made to reach an “important consensus”. The White House announced that “a trade deal had been struck”. President Donald Trump said the two sides were working on “a total reset”. But until Secretary Bessent held a press conference on May 12, it was unclear if the tariffs would be reduced. Bessent also said that “both sides showed great respect” during their talks, and that “we both have an interest in balanced trade”. Ahead of the planned talks, the Chinese government said it would not tolerate double standards or compromise its principles to reach a deal. U.S. President Donald Trump has indicated he may lower tariffs on Chinese goods to 80% from the current 145%. “80% tariff on China seems right,” he said in a social media post. Trump added that the decision was “up to” U.S. Treasury Secretary Scott Bessent.
In comments made prior to the start of the talks, scholars were skeptical. “The immediate objective behind the talks is the urge to restore stability in the global markets and world trade,” said Amitendu Palit, Senior Research Fellow at the National University of Singapore’s Institute of South Asian Studies. “For both the U.S. and China this is an imperative, as they realize that economic confrontation is certainly not win-win.” Markets in the U.S. are “losing faith”, said Charles Chang, Professor of Finance at Fudan University in Shanghai, pointing to weakness in the U.S. dollar and a renewed appetite for gold. “If the U.S. doesn’t do something, it’s going to get worse.” While China may wish to avoid the perception it is destabilizing the global economy by refusing to negotiate, most felt Beijing could pass that blame to the U.S. and is unlikely to feel the need to make meaningful concessions. “Beijing also feels like its economy has enough momentum to weather some of the shocks,” said Nick Marro, lead global trade analyst at the Economist Intelligence Unit. “I think this is a bit dangerous, because it means both governments are confident and that is going to keep their negotiating positions pretty hawkish,” Marro said. “We should look at the talks as the path forward for future negotiations.”
This overview is based on reports by the Guardian, the Global Times and the South China Morning Post.
