Washington has expressed cautious optimism following the conclusion of a weekend of trade discussions with China aimed at easing the tensions sparked by President Donald Trump’s aggressive tariff policies.
U.S. Treasury Secretary Scott Bessent, speaking to reporters in Geneva, emphasized that the talks had been “productive” and that significant progress had been made. “I’m happy to report that we’ve made substantial progress between the United States and China in the very important trade talks,” Bessent stated, adding that a full briefing on the outcome would be provided on Monday.
Bessent’s remarks were echoed by U.S. Trade Representative Jamieson Greer, who participated in the closed-door negotiations alongside Chinese Vice Premier He Lifeng. Greer noted that the differences between the two sides were “not so large as maybe thought,” signaling that the discussions may not be as contentious as initially feared.
President Trump, who had posted on Truth Social after the first day of talks, described the discussions as “very good,” further calling them “a total reset negotiated in a friendly, but constructive, manner.” Trump expressed hope that the talks would result in a positive shift in trade relations between the world’s two largest economies.
Chinese officials, however, remained tight-lipped about the progress, with the Chinese state news agency Xinhua only describing the talks as “an important step in promoting the resolution of the issue.” The Chinese delegation was expected to address the media later that evening.
The discussions marked the first time since the imposition of hefty new tariffs by the Trump administration last month that senior officials from the U.S. and China met face-to-face to tackle the escalating trade war. The new tariffs, which have been met with retaliatory measures from Beijing, have raised concerns over the economic impact on both nations.
A ‘Lose-Lose’ Situation
Experts, including Citigroup’s global chief economist Nathan Sheets, emphasized that the ongoing trade war, marked by steep tariffs on both sides, is ultimately detrimental to both economies. Sheets referred to the tariffs as a “lose-lose proposition” for the U.S. and China, with current levies on Chinese goods reaching as high as 245 percent and retaliation from China imposing 125-percent tariffs on U.S. goods.
Ahead of the Geneva meeting, Trump hinted on social media that he might consider reducing tariffs, suggesting an “80% tariff on China seems right!” However, U.S. Press Secretary Karoline Leavitt clarified that the U.S. would not lower tariffs unilaterally. Any reduction in tariffs would require reciprocal actions from China.
Both the U.S. and China played down expectations of a major breakthrough, with Bessent emphasizing that the focus of the talks was on “de-escalation” rather than a “big trade deal.” Beijing, in turn, insisted that the U.S. must first ease its tariffs for negotiations to move forward.
Economic Implications and Business Sentiment
Despite the lack of concrete outcomes from the talks, economists are cautiously optimistic that the discussions could have positive implications for businesses and global financial markets. Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, noted that the mere fact that the two countries were engaging in dialogue was “good news for business” and could stabilize market sentiment. However, he remained skeptical about any return to normal trade relations, suggesting that even a tariff reduction to 70 or 80 percent could severely impact bilateral trade.
China, entering the talks with a positive economic report showing an unexpected rise in exports, is seen as being in a stronger position to withstand the trade war. Analysts suggest that China has successfully re-routed its trade to Southeast Asia, mitigating the impact of U.S. tariffs.
In the backdrop of the U.S.-China talks, President Trump also recently concluded a trade deal with Britain, marking his first trade agreement since implementing global tariffs. This deal, however, maintained a 10-percent baseline levy on most British goods, further highlighting the limited scope of the U.S.’s tariff policy.
Limited Expectations for Significant Change
Despite some early optimism, analysts have tempered expectations for the upcoming rounds of U.S.-China talks. Citigroup’s Nathan Sheets expressed doubt that any significant breakthroughs would occur, citing the complexity of the issues at hand and the high level of tariffs already in place. Nonetheless, Trump remains hopeful that the trade talks will lead to a more favorable environment for American businesses in China.
As the talks continue, it remains unclear how much progress will be made on reducing tariffs or resolving other trade issues. However, both sides seem to be signaling that a long-term resolution will require concessions from both parties.
