President Trump on Friday suggested he was open to significantly reduce the tariffs the US has imposed on China as US-China negotiators prepare to meet in Switzerland for high-stakes trade talks this weekend.
Trade tensions between the US and China are struggling with international markets and the global economy. The negotiations on Saturday and Sunday are intended to help escalate the situation and set the stage for a broader trade deal between the two economic superpowers.
In a social media post, Trump said the 80% tariff on China “seems to be right,” adding that it would be “until Scott B,” an obvious reference to Treasury Secretary Scott Bescent.
The 80% tariff will be significantly lower than the current 145% that Trump has imposed on Chinese imports in recent months. But that high level would still cut off most trade between the countries. China's data released Friday showed that shipments from the country to the US plummeted 21% in April from the same period a year ago.
White House spokesman Karoline Leavitt said Friday afternoon that Trump “threw it out there” and cuts will only occur as part of the negotiations.
“The president still remains in his position that he has no intention of unilaterally overcoming tariffs on China,” Leavitt said. “We need to see the concessions from them too.”
It is also unclear whether the consultations will lead to a short-term resolution between the two governments, which have had serious economic disputes and have been harsh on other governments in recent months.
The Trump administration is competing to attack trade contracts with other countries ahead of voluntary deadlines for additional tariffs to be effective on most trading partners. However, it remains a standoff with China and is already subject to a minimum tariff of 145% on all imports.
This week, both sides agreed to hold a meeting in Geneva, including Mr. Becent. Jamieson Greer, US Trade Representative. And he is Lifeng, the deputy prime minister of China's economic policy.
The US stock market opened higher on Friday after Trump expressed his willingness to lower tariffs and in another post said many trade deals were “hoppers.” On Thursday, Trump highlighted a new preliminary economic agreement with the UK as evidence that his tariff strategy was working.
The recent promotion of Becent, considered a trade pragmatist to lead talks with China, has also helped calm the market. The Treasury Secretary argued that tariffs and trade restrictions collected by the US and China were “unsustainable,” urging Beijing to begin talks to address what the Trump administration considers as unfair trade practices.
Despite signs of flexibility from Trump, the 80% tariff may not be low enough to reopen business across the Pacific.
That varies from company to company, but some executives say that tariffs above 50% are generally sufficient to freeze exports to the US. Companies that can't find alternative sources of products outside of China face bankruptcy and layoff prospects as summer shatters, and even a 25% tariff could be crippled.
Speaking at the Milken Institute Global Conference this week in Los Angeles, Citigroup CEO Jane Fraser said companies could withstand tariff reductions, but trade uncertainty forced them to suspend investments and employment.
“In 10% of the clients we talk about, they say, 'Yeah, we can absorb that,'” she said. “At 25%, that's not that much.”
Economists warn that Trump's tariffs are increasing the chances of a recession in the United States. Last month, the International Monetary Fund downgraded its US and global production outlook.
While some companies have begun to raise prices as a result of taxation, the impact of Trump's tariffs is still less obvious to US consumers. That's because it takes weeks to ship items from China to the US by sea, and because businesses stockpile generous amounts of stock before customs duties come into effect.
However, as trade between the US and China is halting, these effects begin to become more clear, in the form of higher prices and short supply.
“Companies know what happened,” said Ryan Peterson, CEO of logistics company Flexport. “Their business model is under a lot of pressure.”
The longer the US waits for the tariffs to change, the more “the more severe the shock becomes.”
It remains unclear how Beijing will take Trump's tone change. A few weeks after refusing to “kneel” at US demands, China said it had decided to come to the table for “global expectations, Chinese interests, American industry and consumer appeal.”
But it also struck a rebellious tone. “We have no fear,” Deputy Minister Hua Chany told reporters on Friday during a trip to rural China. “We don't want to have a war with any country, but we have to face reality,” she said, according to a Reuters report.
The Chinese government has not confirmed who he and others are in discussions with American officials. However, one source agreed to talk about the terms of anonymity, said Wang Xiaohong, Chinese Minister of Public Security, was traveling with him in Switzerland. The negotiations on fentanyl will be led by Wang, who is also the director of China's drug control committee.
Ja-Ain Chong, an associate professor of political science at the National University of Singapore, said: China is willing to make concessions in areas such as balancing the country's trade surplus, or may help to curb the export of fentanyl precursors.
“I doubt this specific thing coming out of the set of upcoming meetings,” added Chong.
But the Trump administration is under pressure to show progress in trade talks after weeks of volatility in the market and growing fears in Wall Street and recession businesses.
“We're a great leader in our efforts to help our team,” Kevin Hassett, director of the White House National Economic Council, said on CNBC on Friday. “We are joint and we also look at sketches of positive development.”
Trump said this week at the White House that he expects talks with China to be substantial. However, analysts have eased optimism about a quick breakthrough, as China generally prefers to engage in extended formal negotiations. In addition to tariff reductions, the comprehensive transaction is expected to have a more specific list of requirements from both sides.
Despite Trump's affinity for tariffs, in another post on True Social on Friday, he insisted on an open market and called on China to expand access to American companies.
“China should open a market in the US. It's very good for them!!! A closed market won't work anymore!!!” Trump wrote.
Tony Romm contributed the report.
