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Top Economic Officers from the United States and China are ready to meet on Saturday in Geneva for negotiations with high efforts that can determine the fate of a world economy shocked by President Trump’s trade war.
The meetings, planned to continue on Sunday, will be the first because Mr Trump has raised rates on Chinese import to 145 percent and China took revenge on his own 125 percent levies on American goods. The Tit-for-Tat effectively reduces trade between the world’s greatest economies and increases the possibility of a global economic decline.
Although the commitment to the meetings is high, the expectations for a breakthrough that results in a meaningful reduction in rates are low. It took weeks before China and the United States even agree to talk, and many analysts expect that this weekend’s discussions will run to determine what each party wants and how negotiations can continue.
Nevertheless, the fact that Beijing and Washington finally talk has called the hope that the tension between them can be harmless and that the rates could eventually be reduced. The impact of the levies is already up to the world economy, the reorientation of supply chains and ensuring that companies pass on extra costs to consumers.
The negotiations will be closely monitored by economists and investors, who fear that an American Chinese economic war will lead to lower growth and higher prices around the world. Companies, in particular those who trust Chinese imports are also alert to the conversations while struggling with how they can deal with the new taxes and the uncertainty about whether they will remain in place.
“Both the US and China have strong economic and financial interests in de-escalating their trade in trade, but a sustainable détente is hardly ahead,” said Eswar Prasad, a former director of the Chinese division of the International Monetary Fund.
“Nevertheless,” he added, “it represents considerable progress that the two parties at least initiate at a high level and offer the hope that they will temper their rhetoric and withdraw from further open hostilities on trade and other aspects of their economic relationship.”
The negotiators of the Trump government are led by Minister of Finance Scott Bessent, a former hedge fund manager who said that the current tariff levels are untenable. He will be accompanied by Jamieson Greer, the American trade representative, who has contributed “Phase 1” deal with China. Mr. Trump’s Hawkish trade advisor, Peter Navarro, was not planned to participate in the conversations.
He Lifeng, the Deputy Prime Minister of China for Economic Policy, leads the conversations on behalf of Beijing. The Chinese government has not confirmed who otherwise he will be at the meetings or that Wang Xiaohong, the Chinese Minister of Public Security, who leads his Narcotics Control Commission, will be present. Mr. Wang’s participation would be a sign that the two parties help Mr. Trump’s concern about helping China to help the Fentanyl in the United States.
The trade fight has begun to take a toll from the largest economies in the world. On Friday, China reported that exports to the United States in April fell by 21 percent compared to a year earlier. Some of the largest American companies have said that they should increase prices to tackle the rates, so that Mr. Trump’s promise to ‘end’ inflation.
On Friday, Mr. Trump signaled That he was willing to lower rates, which suggests that a rate of 80 percent looked appropriate on Chinese import. Later in the day, Mr Trump said, referring to the Chinese commercial conversations, “we have to make a lot for America.” He added that he would not be disappointed if no deal was reached, with the argument that not doing business is also a good deal for the United States.
The president also repeated that he had proposed to lower Chinese rates to 80 percent, and added: “We will see how that works.”
The Trump government has accused China of it to subsidize the most important sectors of his economy and to overflow the world with cheap goods. The United States have also put pressure on China to take more aggressive steps to curb the exports of precursors for Fentanyl, a medicine that has killed millions of Americans.
China has been steadfast to say that it does not intend to make trade concessions in response to Mr Trump’s rates. Officials have insisted that the nation agreed to have interviews at the request of the United States.
“This tariff war was launched by the American side,” said Liu Pengyu, the spokesperson for the Chinese embassy in Washington, this week. “If the US really wants a negotiated solution, stop making threats and putting pressure and having conversations with China based on equality, mutual respect and mutual benefit.”
A rate of 80 percent, while a large decrease in the current 145 percent, would probably close the most trade between countries.
China and the United States could take other concrete gestures to pave the way for future negotiations, other experts said.
An option would be to scale the rates back to around 20 percent, where they were at the beginning of April before Mr Trump announced 34 percent on goods from China and followed the mutual retribution, said Wu Xinbo, the dean of the Institute of International Studies at Fudan University in Shanghai.
“If we can scale back to that phase, I think it will be a great progress to lead to more constructive negotiations,” said Mr. Wu.
He said that China was willing to talk about Fentanyl as a separate problem, and added that China had offered to sit with the Trump administration in February after Mr Trump first announced plans rates On Chinese goods, referring to the stream of illegal fentanyl to the United States.
The United States and China meet in the vicinity of the headquarters of the World Trade Organization, which has sharply criticized the tariff wars of Mr Trump. The group has predicted that the continuous division of the global economy in “rival blocks” could reduce global gross domestic product in the long term by almost 7 percent, in particular the harm of the poorest countries in the world. A spokesperson for the WTO said it welcomed the conversations as a step towards de-escalation.
The alternative – a world in which the United States and China no longer adhere to trade – can be economically painful and destabilizing. American consumers, who have come to trust cheap goods from China, will soon be able to confront shopping shelves and high prices for the remains of the products.
The National Retail Federation said on Friday that import freight traffic in the United States is expected to decrease this year for the first time since 2023, when the supply chain problems were persistent and attributed the decrease in Mr Trump’s rates.
“We are starting to see the true impact of President Trump’s rates on the supply chain,” said Jonathan Gold, vice -president of the retail federation for supply chain and customs policy. “Ultimately, these rates will influence consumers in the form of higher prices and less availability in the shopping boards.”
The Trump government raced to conclude trade agreements with 17 other major trading partners after the president’s decision to pause the mutual rates he announced in April. On Friday he greeted a provisional agreement with Great Britain as proof that his tariff strategy worked.
Economists are encouraged by signs that the White House seems ready to scale up rates.
“This hurry to show progress on ‘deals’ reveals rising despair within the administration to reverse rates before they achieved GDP growth and inflation,” wrote Paul Ashworth, Chief North -America -economics for Capital Economics, in a memorandum to customers. “With the slump in incoming container ships from China that evokes the fear of threatening shortages in the US, the pressure on the Trump government is building to de-calate that build-up.”
Capital economy estimates that if the United States would lower its rates on China to 54 percent, the total effective rate percentage for import for the United States would fall to 15 percent of 23 percent. That would reduce its growth and inflation forecasts in accordance with the estimates of earlier this year based on the commitments of Mr Trump.
It remains unclear whether Mr Trump would accept a rate percentage of 54 percent.
On Friday he suggested that he was willing to lower the rates to 80 percent when he gave Mr Bessent the authority to close a deal.
“80% rate on China seems right! From Scott B.,” Mr. Trump wrote on Truth Social, his social media platform.
Later in the day his press secretary, Karoline Leavitt, said that 80 percent figure was not an official offer and instead was “a number that the president threw there.” She added that Mr Trump would not lower the rates on China, unless Beijing also lowered his taxes.
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