Donald Trump suggested on Friday the possibility of lowering the current high tariffs on China, which stand at 145%. However, this does not indicate that a comprehensive trade agreement is imminent between the two nations.
Trump is reportedly considering reducing tariffs on China to 80%, coinciding with US Treasury Secretary Scott Bessend’s meeting with Chinese officials in Geneva this weekend. Nonetheless, such a reduction is unlikely to immediately rejuvenate bilateral trade, as the volume of Chinese imports to western US ports continues to plummet. Analysts believe that Chinese Vice Premier He Leifeng, leading the discussions on behalf of Beijing, is not expected to offer significant concessions. As reported by Politico, there is a growing consensus that China will not rush to finalize a deal without a clearer understanding of the Trump administration’s objectives and its own interests.
“He will likely be in a listening mode and will relay what he learns to President Xi,” stated Christopher Adams, former senior coordinator for Chinese affairs at the US Treasury Department. “While I imagine they are considering various strategic options, I don’t expect him to have the authority to make key decisions during the negotiations.”
Some Trump supporters acknowledge that the proposed tariff reductions are largely symbolic, yet they view them as a crucial initial step toward a broader de-escalation of the trade conflict between the world’s two largest economies.
“It’s more about the symbolic progress than the practical implications,” indicated a source familiar with the negotiations, as quoted by Politico. “Markets may react positively to any sign of improvement in trade relations with China.”
Concerns Among Markets and Businesses
However, business leaders, lawmakers, and economists are already issuing warnings that even if progress is made this weekend, it may not be swift enough to avert serious economic fallout. “A 65% tariff reduction might sound generous, but it essentially remains a barrier rather than a gateway,” commented a former official from the Trump administration who wished to remain anonymous.
Bilateral trade between the US and China reached $582.4 billion in 2024, with Chinese exports to the US totaling $439.9 billion, according to the US Trade Representative’s office. Trump’s tariffs have drastically curtailed shipments of Chinese goods to US ports in recent weeks, leading companies dealing in toys, household items, tools, and clothing to raise prices, further complicating the situation for US manufacturers.
Simultaneously, import volumes at western US ports have declined, limiting the export capabilities of US companies. Small businesses are fearful of potential closures, while major retail chains warn of possible product shortages for consumers by late summer if tariffs persist.
Predictions for Price Increases
Even with potential tariff reductions, many businesses have already faced challenges, as they are currently stocking up for back-to-school sales this late summer. This preparation is being hindered by uncertainties surrounding future orders. Economists anticipate price hikes by June or early July, as existing inventory accumulated prior to the tariffs begins to diminish.
This weekend’s meeting is expected to be just the starting point of a lengthy negotiation process that may take months or even years to finalize.
“Trump believes that the Chinese need us more than we need them. Conversely, the Chinese are equally convinced that we rely on them more than they rely on us,” noted William Raids, a former senior US trade official and senior adviser at the Center for Strategic and International Studies. “Such perspectives do not facilitate a swift resolution.”
This makes the weekend meeting more of a position exchange, potentially paving the way for more directed future negotiations.
“View it as confidence-building actions at the onset of a challenging negotiation, signaling diplomatically and politically that mutual concessions are possible and real negotiations can take place,” explained Emily Kilchrist, a former deputy assistant to the US trade representative at the end of Trump’s first term and the beginning of Joe Biden’s administration.
Beijing seems resolute in resisting Donald Trump’s tariffs, asserting it can better navigate an economic slowdown than the US, where consumers are grappling with high inflation post-Covid-19 and dwindling consumer confidence.
At the same time, Beijing has indicated interest in a deal that could provide some relief, offering exemptions earlier this week from high retaliatory tariffs on crucial US imports such as microchips, pharmaceuticals, and aircraft engines, while maintaining a tough stance.
The White House aims to showcase any signs of progress in the discussions as part of its larger strategy to reassure consumers and stabilize volatile financial markets adversely affected by the president’s stringent trade policies and numerous new tariffs.
Trump told reporters on Friday: “I believe we will reach a fair agreement that benefits both sides, including China.” However, he added that he wouldn’t be disheartened if Bessent returns without a deal.
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