US President Donald Trump’s government is considering a dramatic reduction in dictatorial During the talks that will take place on the weekend (10-11.5.2025) with the China To divergent the tensions and mitigate the financial impact that both countries have begun to have.
According to sources cited by Bloomberg, talks expected to start in Geneva on Saturday, led by US Finance Minister Scott Besed and Chinese government spokesman Hen Lifeng, the US side has set duties to reduce duties. under 60% As a first step, which they believe that China can be ready to follow. These reductions could be applied from next week, the same sources said.
Talks will be more exploratory and oriented to express complaints than to find solutions to the long list of problems each side has with each other, sources say. The situation is fluid, which means that there is no certainty that duties will be reduced in the short term, they said.
Also high on the US wishes list is to ensure lifting China’s export restrictions for the rare land used for the manufacture of magnets, as a range of industries have disorders. Progress has also been made on the subject of fentanyl. Sources told Bloomberg that there could soon be separate talks to reduce Chinese exports of the ingredients used to produce opiate, which has led to an increase in overdose deaths in recent years.
Both the Treasury and the Office of US Commercial Representative Jameson Green, who participates with Besed in the talks, refused to comment. In a statement, White House spokesman Cous Desai said: “The only goal of the government with these talks is to promote President Trump’s financial agenda” First in America “to just and mutual trade relations. Any discussion on targets of duties is unfounded. “
The biggest issue faced by the Trump government is that the tariffs between the world’s two largest economies have grown so much, with US duties in many Chinese imports reaching 145%. Even a dramatic decline is unlikely to “soften pain” for US consumers amid warnings for higher prices and empty shelves this summer.
In their statements on Thursday (8.5.2025), US officials by President Donald Trump made clear their desire to reduce their duties rapidly in response to Chinese retaliation for the announcement of new duties on April 2.
“They can’t get any more – it’s at 145%, so we know they’ll be reduced,” Trump told reporters yesterday as announced the outlines of a trade agreement between the US and the United Kingdomat the Oval Office at the White House. “I think we’ll have a good weekend with China.”
“The decline, the reduction of these percentages where they could, where it should be, I think is Scott Besed’s goal. I think this is the goal of the Chinese delegation, “Hauard Lutnik’s Commerce Minister told CNBC. “And this is what the president hopes to be a good result, it is a world of divergent where we will return to each other and then work together for a great deal.”
US shares rose yesterdayas investors welcomed Trump’s comments on commercial talks with China. Hopes that the US would normalize trade agreements have contributed to the rise of the S&P 500 index in general where it was before the announcement of the Trub duties in early April, which caused the worst day for Wall Street by 2020.
Chinese officials, meanwhile, were cautious about their talks goals. Beijing reiterated its appeal to the Trump government yesterday to cancel unilateral duties against China, with a spokesman for the He Yadong Ministry of Commerce saying that The US ‘must show honesty, talk, and be ready to fix their mistakes».
A US move to reduce duties could find a response from China, said Song Hong, Deputy Director of the Chinese Academy of Social Sciences, a leading government thought tank in Beijing. “The US should take the initiative to reduce their duties in China because the trade war began on their part,” Song Hong said. “If it reduces existing contributions, e.g. At 60% or lower, I think China will follow its example and reduce its duties to American products. ” However, It is unlikely that all duties will be removedhe said, after the US has been described by China for years as a strategic opponent. “China no longer has the illusion that US policy on China will change,” he said.
Coexistence or disconnection?
Although expectations are limited to the talks of this weekend, the fact that they are done, offers some optimism. “US and China should find a way to coexist or They will be disconnected and there will be huge consequences for the global economy and the world order“Skott Kennedy, a specialist in the Chinese economy and US -China economic relations at the Center for Strategic and International Studies in Washington, said. “Therefore, one cannot overestimate the importance of these negotiations.”
On the other hand, he added, talks are just the beginning of a long process, making this weekend ‘a constructive small step on a 10,000 -mile trip” The declining that the Trump government seems to be targeting is largely equivalent to returning to the duties presented by the president on April 2, to what he called “a day of liberation”. These duties caused upheaval in the global financial markets and a rapid tit-for-tat escalation from Beijing.
The “reciprocal” duties of 34% in goods from China announced on April 2 were added to the 20% fentanyl duties, which Trump imposed in the first weeks of his second term. They were also added to 25% duties to other Chinese products dating back to its first term, which means that even if the US returns to the beginning of April, some Chinese products coming to the US will face 79% or more tariffs.
“Even if they reduce them in half, they are still far above the levels we’ve ever seen before,” said Wendy Katler, a former US diplomat for trade. “They will seriously limit trade.”
According to Bloomberg Economics calculations, Existing duties in China and the rest of the world have increased the average US duties by more than 20 percentage points to 23%. Reduction of the coefficient for China back to 34% implemented on April 2 would reduce the increase in the average rate to 12,6 percentage points. But this would continue to be the largest increase in the US since 1930 and would leave a very high tariff wall around the world’s largest economy. Economic ‘pain’, either otherwise, is likely to remain important.
Financial blow
With their current rates, duties will reduce US GDP by 2.9% and increase basic prices by 1.7% over two to three years, according to Bloomberg Economics. At half of today’s pace, the burden would be half, but again important for an economy that shrunk in the first quarter of this year before duties. Other economists argue that the haste to create reserves for new duties has given US businesses a pillow – at least for the time being.
The commercial deficit recorded a record in Marchas companies rushed to import products, indicating that companies have created a stock pillow. For China, the duties probably contributed to the worst shrinking of plants since December 2023. While April exports were stronger than expected, Shipments to the US have been cut abruptlywith the impact of the trade war being likely to become more intense than this month.
Even if there is an agreement to reduce duties in the coming days, this does not mean that the US and China are running towards a broader agreement to resolve their trade disputes. In a rally organized by JPMorgan last month, Bessed said he believed it would take 2-3 years to reach an agreement with China. At a hearing in Congress this week, Bessed was asked if talks with China have advanced. “We will start on Saturday, which I believe is the opposite of the advanced,” he replied.
A long process
“Through these talks, we will find out if the US is serious and prepared for meaningful negotiations,” said Sinbo Wu, director at the Fudan University Center for American Studies in Shanghai. But “the negotiations, once they start, will be a long and complicated process. So this is largely the beginning. Let’s not be overly optimistic. “
Each side has many reasons to be suspicious of the other. China would like to see US duties decrease in levels before April and it is not clear that Trump is willing to do so. The preliminary agreement presented with the United Kingdom yesterday left a new 10% additional 10% tax on British imports, despite concessions made by the British government.
On the US side, it is not clear whether China is ready to proceed with structural reforms such as the termination of industrial subsidies and other practices that Washington has long argued that they are necessary to balance trade.
Both sides also seem to approach the weekend’s negotiations with the view that they have the upper hand, which increases the risk of incorrect calculations. US officials seem to be convinced that the Chinese economy is suffering more than the American, while Chinese officials see polls that show the decline in Trump’s popularity and how the fall of markets in April made him some of them.
Indeed, both are aware of their domestic audience. THE Chinese President Xi Jing He has seen a wave of patriotic emotion within China that urges him to resist US pressures while American Donald Trump He has a history of counterattacking when he thinks he has been in a difficult position.
«The obstacle to an agreement is the pride of both leaders“, Said Andrew Collier, a long -term observer of China at the Kennedy School at Harvard University. “In the case of Trump, there are his promises to his political basis that he will” solve “the trade deficit through duties,” Colleier added. “Si still works to control his army, as numerous corruption campaigns show, and must also prove to the political office that he is not going to show weakness in the US.”