The top US and China economic officials are poised to meet in Geneva on Saturday, and will hold high-stakes negotiations that will determine the fate of the global economy, which has been shaken by President Trump's trade war.
The meeting, which is scheduled to continue on Sunday, is the first as Trump pushed tariffs on Chinese imports to 145% and China retaliated with 125% of its US goods. TIT-for-for effectively blocked trade between the world's largest economy, increasing the chances of a global economic downturn.
While the meeting's interests are high, expectations for breakthroughs that will result in a meaningful reduction in tariffs are low. It took several weeks for China and the US to even agree to talk. Many analysts hope this weekend's discussions unfold to determine what each side wants and how negotiations move forward.
Still, the fact that Beijing and Washington are finally talking raised hope that tensions between them could ease and tariffs could ultimately fall. The impact of taxation has already spread across the global economy, reorienting supply chains and businesses passing additional costs to consumers.
Negotiations are closely monitored by economists and investors. Economists and investors fear that the American economic war will lead to slower growth and higher prices around the world. Companies that rely on Chinese imports in particular are also highly wary of consultations when tackling uncertainty about how to deal with new taxes and whether they are appropriate.
“The United States and China both have strong economic and financial interests in eliminating trade hostility, but the durable detente is barely offshore,” said Eswar Prasad, former director of the International Monetary Fund's China division.
“Nottheless, it represents a great advancement in both sides at least initiating high levels of negotiations, mitigating rhetoric and providing hope to pull back from further obvious hostilities regarding trade and other aspects of economic relations.”
Negotiators for the Trump administration are led by Treasury Secretary Scott Bescent, former hedge fund manager who has said current tariff levels are unsustainable. He was joined by US trade representative Jamieson Greer to help Trump design his first trade agenda. Trump's Hawkish trade adviser Peter Navarro was not planning to attend the talks.
His Lifeng, China's Deputy Prime Minister of Economic Policy, leads the consultations on behalf of Beijing. The Chinese government has not confirmed who else will be with him if Wang Xiao Hong, the Minister of Public Security, who directs the Drug Control Commission, is present. Wang's participation is a sign that both parties may discuss Trump's concerns about China's role in helping fentanyl flow to the US.
The trade battle began to hit the world's largest economy. On Friday, China reported in April that exports to the US had fallen 21% from the previous year. Some of the largest companies in the United States have said prices must be raised to deal with tariffs and are opposed to Trump's promise to “end” inflation.
On Friday, Trump signaled that he was ready to begin lowering tariffs, suggesting that an 80% rate of Chinese imports would be appropriate. Later that day, referring to China's trade talks, Trump said “it has to be made a lot for America.” He added that he wouldn't be disappointed unless he reached the deal immediately, and insisted that he wasn't in business was a significant deal for the US.
The president also reiterated his proposal to reduce China's tariffs to 80%, adding, “I see how it works.”
The Trump administration has accused China of unfairly subsidizing key sectors of its economy and flooding the world with cheap goods. The US has also pressured China to take more aggressive steps to curb the export of fentanyl precursors, the drug that killed millions of Americans.
China has been steady saying it has no intention of making trade concessions in response to Trump's tariffs. Officials alleged that the country agreed to engage in consultations at the US request.
“This tariff war was launched by the US,” said Liu Pengyu, a spokesman for the Chinese Embassy in Washington. “If the US really wants a negotiated solution, it should stop the threats and exert pressure and engage in consultations with China based on equality, mutual respect and mutual interest.”
The 80% tariff is down significantly from the current 145%, but it is likely to halt most domestic trade.
China and the US could take other concrete gestures to help pave the way for future negotiations, other experts said.
One option is to reduce the tariffs to about 20%. Trump was in early April before announcing 34% collection of goods from China and announced mutual retaliation, said Wu Singbo, dean of the International Institute at Hudan University in Shanghai.
“If we can reduce to that stage, I think it's a huge progression that leads to more constructive negotiations,” Wu said.
He added that China is ready to talk about fentanyl as another issue and that he offered to sit with the Trump administration in February after Trump first announced plans to impose tariffs on Chinese products, citing the flow of illegal fentanyl to the US.
The United States and China meet in close proximity to the headquarters of the World Trade Organization, which has been sharply criticising Trump's tariff war. The group predicts that by continuing to divide the global economy into “rival blocs,” it will cut global total product by nearly 7% over the long term, particularly the world's poorest countries. A WTO spokesperson said they welcomed the consultation as a step towards de-escalation.
An alternative – a world where the US and China are no longer engaged in trade – can become economically painful and unstable. American consumers, who have relied on cheaper products from China, were able to quickly confront the shelves of thin, stocked stores and the high prices of remaining products.
The National Retail Federation said Friday that US imported freight transport is expected to fall for the first time since 2023, when supply chain problems were persistent, resulting from a decline in Trump's tariffs.
“We are beginning to see the real impact of President Trump's tariffs on the supply chain,” said Jonathan Gold, Vice President of Supply Chain and Customs Policy at the Retail Federation. “Ultimately, these tariffs affect consumers in the form of high store prices and low availability.”
The Trump administration is competing to enter into trade contracts with 17 other major trading partners after the president's decision to suspend mutual tariffs, announced in April. On Friday, he welcomed a preliminary agreement with the UK as evidence that his customs strategy was working.
Economists are heartfelt in signs that the White House appears to be ready to reduce tariffs.
To demonstrate progress in “trading,” the rush reveals the growing despair within the administration to roll back tariffs before reaching GDP growth and inflation,” wrote Paul Ashworth, North American economist in Capital Economics, in a note to his client. “The sluggishness of incoming vessel ships from China has led to increased fear of the US pressing shortage, and pressure is on the Trump administration to escalate its tariff accumulation.”
Capital Economics estimates that if the US lowers China's tariffs to 54%, the overall effective tariff rate on US imports would fall from 23% to 15%. This makes growth and inflation forecasts consistent with estimates earlier this year based on Trump's campaign pledge.
It remains unclear whether Trump will accept the 54% tariff rate.
On Friday he proposed that he was ready to lower the tariff to 80% as he gave Bescent the authority to do the transaction.
“China's 80% tariffs seem right! From Scott B,” Trump writes about his social media platform, True Social.
Later that day, his spokesperson, Karoline Leavitt, said the 80% figure was not an official offer, but instead “the number the president has thrown out there.” She added that Trump would not lower Chinese tariffs unless Beijing also reduces taxes.
