The United States remains hopeful as discussions with senior Chinese officials continued for a second day, aiming to alleviate trade tensions that arose from President Donald Trump’s aggressive tariff implementation.
As the two days of high-level talks in Geneva approached conclusion, US Commerce Secretary Howard Lutnick stated to CNN that he was “optimistic that things will work out well.”
This remark followed Mr. Trump’s post on his Truth Social platform after the first day of negotiations, where he described the prior day’s discussions as “very good,” labeling them “a total reset negotiated in a friendly, but constructive, manner.”
Chinese vice premier He Lifeng is representing Beijing at the discussions.
While China has yet to respond, Chinese state news agency Xinhua referred to the talks as “an important step in promoting the resolution of the issue” the previous day.
After a two-hour lunch break, the delegations resumed talks at a discreet villa with sky-blue shutters on the left bank of Lake Geneva around 3.30pm (2.30pm Irish time), according to an AFP reporter on-site.
Mr. Lutnick informed CNN that both teams were diligently working on negotiations that are “really important” for both parties, but he refrained from disclosing further details about the discussions.
Tariffs ‘lose-lose’
This marks the first instance in which senior officials from the two largest economies have met face-to-face to address the contentious subject of trade since Mr. Trump imposed steep new levies on China last month, which prompted a robust response from China.
“These talks indicate that the current state of trade relations, characterized by extremely high tariffs, is ultimately disadvantageous for both the United States and China,” Citigroup’s global chief economist Nathan Sheets told AFP, labeling the tariffs a “lose-lose proposition.”
The tariffs imposed by Mr. Trump on the Asian manufacturing giant since the start of the year currently amass to 145%, with cumulative US duties on certain Chinese goods reaching an astonishing 245%.
In retaliation, China has enacted 125% tariffs on US goods.
US Secretary of Treasury Scott Bessent met with China’s officials in Geneva.
Prior to the meeting, Mr. Trump hinted at potentially lowering tariffs, suggesting on social media that an “80% Tariff on China seems right!”
However, his press secretary Karoline Leavitt later clarified that the United States would not unilaterally reduce tariffs, asserting that China must also make concessions.
As the meeting commenced, both sides tempered expectations of a significant change in trade relations; Mr. Bessent emphasized a focus on “de-escalation” rather than a “big trade deal,” while China insisted that the US must first ease tariffs.
The mere fact that these talks are occurring “is good news for business and for the financial markets,” noted Gary Hufbauer, a senior non-resident fellow at the Peterson Institute for International Economics (PIIE).
Nevertheless, Mr. Hufbauer expressed skepticism that there would be a return to normal US-China trade relations, indicating that even a tariff rate of 70% to 80% could still significantly reduce bilateral trade.
China ‘better equipped’
China’s vice premier entered the discussions buoyed by Friday’s news of a rise in China’s exports last month, despite the ongoing trade war.
This unexpected outcome was attributed by experts to a rerouting of trade to Southeast Asia to mitigate US tariffs.
Among some of the more moderate Trump officials, such as Mr. Bessent and Mr. Lutnick, “there’s a realization that China is better equipped to handle this trade war than the US,” said Mr. Hufbauer.
The Geneva meeting follows Mr. Trump’s unveiling of a trade agreement with the UK, marking the first deal with any country since he initiated his wave of global tariffs.
Containers in Nanjing Port, China.
The five-page, non-binding agreement reassured anxious investors that the US is open to sector-specific relief from recent duties while maintaining a 10% baseline levy on most British goods.
Following the US-UK trade announcement, analysts have expressed doubt about the potential for negotiations to yield substantial changes in the US-China trade relationship.
“It’s encouraging that they’re engaging in dialogue. However, my expectations for the actual outcomes of this initial round of talks remain quite limited,” Mr. Sheets from Citigroup remarked.
In a post on his own Truth Social platform, Mr. Trump claimed the discussions had achieved “GREAT PROGRESS!!”.
“We aim to see, for the benefit of both China and the US, an opening up of China to American business,” he added.
