Trade Tussle Easing Up: US-China Dialogue in Geneva
United States and China engage in talks regarding trade agreements.
After a protracted trade standoff, the United States and China are finally engaging in talks to minimize tension that's been impacting the world's two largest economic powerhouses. This delightful development is unfolding in Geneva where the action kicked off on a sunny Saturday morning.
High-ranking delegates from both nations are in attendance, with the U.S. sending Treasury Secretary Janet Yellen, Trade Representative Katherine Tai, and USA's Ambassador to Switzerland and Liechtenstein, largely known as Denis O'Brien. On the Chinese side, Vice-Premier Liu He is leading the discussions.
The clandestine location for these talks, a serene Swiss residence overlooking a sprawling city park, has been hosting the diplomatic dance since early morning. Post lunch, the teams resumed discussions around 2:30 PM local time (8:30 PM EST), as reporters from AFP observed.
These dialogues are rumored to continue on the following day.
Tension Alleviation
Just before the talks, former U.S. president Donald Trump marked a gesture towards a truce by suggesting slashing tariffs on Chinese goods to 80%. On the matter, US Commerce Secretary Gina Raimondo shared during a CNN interview, “The President is sincere in his desire to find a resolution. He wants to de-escalate the situation.”
Trump’s move, while symbolic, still leaves the tariffs prohibitively high for most Chinese goods in the U.S. market. The experimental tariffs of 145% overlaid on existing tariffs have been Trump's weapon of choice since his return to the White House. In response, Beijing, who vowed to fight the tariffs “to the end”, retaliated with tariffs of 125% on U.S. goods. This bilateral trade quagmire has resulted in an almost static state, and rollercoaster markets.
Hence, the discussions in Geneva are considered a "positive and constructive step towards de-escalation" by the Director-General of the World Trade Organization (WTO), Ngozi Okonjo-Iweala. Swiss President Karin Keller-Sutter, with a touch of spirituality, hoped for "the Holy Spirit in Rome that descended in Geneva for the weekend" prior to the talks.
Chinese Ace in Pocket?
In a surprising move, China reported an 8.1% surge in its exports in April, beating analysts' predictions by four times. However, exports to the United States plunged near 18%. China suggests it was the Americans who requested these discussions. With gunpowder-keg statements such as, "The U.S. must also make concessions,” White House spokesperson Karoline Leavitt remained firm.
Experts speculate a possible outcome could be a mutual agreement to suspend most, if not all, tariffs imposed this year, and extend these suspensions for the duration of bilateral negotiations. Bonnie Glaser, director of the Indo-Pacific program at the German Marshall Fund, shares this optimistic outlook. Lizzi Lee, a Chinese economy specialist at the Asia Society Policy Institute, envisions a "symbolic and temporary gesture" that may "alleviate tensions but not resolve fundamental disagreements."
Analyst Bill Reinsch signals a potentially unmovable deadlock due to conflicting objectives. "Trump wants to meet Xi Jinping, strike a deal, and then have subordinates work out the details. In contrast, the Chinese aim to resolve all issues before a meeting between the two Presidents," he explains, highlighting their seemingly insurmountable chasm. Hong Kong-based academic Xu Bin, however, sees potential relief in a half reduction of the current tariffs, albeit still too high for comfortable trade.
In this chess game with global stakes, the grandmasters seem to be just beginning to move their pieces. The coming days will reveal whether Geneva becomes a stepping stone for trade peace or continues as a battleground.
- The discussions in Geneva, regarding trade tensions between the US and China, are being attended by high-ranking officials from both countries, including Treasury Secretary Janet Yellen, Trade Representative Katherine Tai, and Ambassador Denis O'Brien from the US, and Vice-Premier Liu He from China.
- The possibility of a mutual agreement to suspend most, if not all, tariffs imposed this year, and extend these suspensions for the duration of bilateral negotiations, has been suggested as a potential outcome of the ongoing dialogues between the US and China, according to Bonnie Glaser, director of the Indo-Pacific program at the German Marshall Fund.
