Trade negotiations between US and Chinese officials began in Switzerland on Saturday, as both countries face a sharp rise in tariffs. The talks follow President Donald Trump’s decision to raise US tariffs on Chinese imports to 145%, prompting China to impose a 125% levy on American goods. US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer opened discussions with Chinese representatives, led by Vice Premier He Lifeng. The talks are crucial for resolving the ongoing trade dispute between the world’s two largest economies, with potential implications for global financial markets.
Background of the Trade Conflict
The trade war between the US and China dates back to President Trump’s first term, with accusations against China for unfair trade practices. The US claims that China forced US companies to share trade secrets, supported domestic firms with state funds, and engaged in intellectual property theft. As a result, Trump imposed tariffs on Chinese imports, leading to a back-and-forth escalation of duties. Recently, President Trump increased tariffs on Chinese goods to 145%, prompting Beijing to respond with a 125% levy on American products.
Diplomatic Talks in Switzerland
The talks, which began on Saturday, are taking place in Geneva, Switzerland. US officials Scott Bessent and Jamieson Greer are leading the negotiations with Vice Premier He Lifeng representing China. While the exact location of the talks has not been disclosed, diplomatic sources confirmed the start of the discussions. Observers saw a convoy of black vehicles entering the residence of the Swiss ambassador to the United Nations, further fueling speculation that the negotiations were taking place there. The two sides held a two-hour meeting before attending a pre-arranged lunch.
Challenges to Reaching an Agreement
Despite the high stakes, experts are not optimistic about the possibility of significant progress in these talks. Both countries may agree to reduce tariffs, but expectations for major breakthroughs remain low. China and the US have imposed extreme tariffs on each other’s exports, causing disruptions in global markets. Ahead of the talks, President Trump hinted at flexibility in tariff negotiations, suggesting that a reduction in the 80% tariff could be considered. However, experts like Sun Yun, a China expert at the Stimson Centre, remain cautious. Sun emphasized that the best-case scenario would be for both sides to de-escalate tariffs at the same time. Even a small reduction could send a positive message to the global market.
Implications for the US and China
Since returning to the White House, President Trump has used tariffs as a key tool in his broader trade strategy. The US trade deficit with China reached €233 billion last year, a significant concern for Trump’s administration. In addition to the tariffs imposed on China, Trump has levied a 10% tax on imports from several other countries, adding to global trade tensions. These measures reflect his administration’s stance on addressing what it sees as unfair trade practices by other nations.
The Phase One Agreement and COVID-19 Disruptions
In 2020, the US and China signed a “Phase One” trade agreement, in which the US halted further tariff hikes in exchange for China’s promise to purchase more American products. However, the COVID-19 pandemic disrupted these plans, and China was unable to fully meet its purchasing commitments. This setback has led to the re-imposition of higher tariffs as both nations continue to grapple with the consequences of the pandemic on global supply chains.
Swiss Trade Concerns
While in Switzerland, US officials Bessent and Greer also met with Swiss President Karin Keller-Sutter. The US had previously planned to impose a 31% tariff on Swiss imports, but Trump decided to pause this increase and maintain the current 10% rate. The Swiss government expressed concerns about the impact of these tariffs on key industries, such as watches, coffee capsules, cheese, and chocolate. These industries play a crucial role in Switzerland’s economy, and officials have warned that higher tariffs could harm their competitiveness.
Despite these concerns, Switzerland has decided not to retaliate against US tariffs at this time. Swiss officials pointed out that 99% of American products now enter Switzerland duty-free, following a tariff reduction implemented last year. This move highlights the delicate balance Switzerland must maintain between protecting its industries and maintaining positive trade relations with the US.