Stepping Stones Toward a US-China Trade Agreement: Promising Progress from Geneva Talks
Top-ranking US officials engaged in significant trade negotiations with China have emerged from the discussions in Geneva, Switzerland, after two intensive days, announcing “substantial progress.” This breakthrough could potentially reshape the global economic landscape. “I am pleased to report we have achieved substantial progress in these critical trade negotiations,” remarked Treasury Secretary Scott Bessent in a concise statement on Sunday, dubbing the discussions “productive.”
US Trade Representative Jamieson Greer suggested they had reached an agreement, following the imposition of significant 145% tariffs on most Chinese goods by President Donald Trump the previous month. In response, China retaliated with 125% tariffs on American products. “The President implemented these tariffs due to a national emergency, and we are optimistic that this deal will aid in addressing that emergency,” Greer stated. He noted the surprising speed of the negotiations indicated the differences might not have been as vast as presumed. CNN has requested specifics from the Treasury Department, but Bessent promised details would be shared early Monday.
Prior to the talks, there was skepticism from Trump administration officials about reaching a deal over the weekend, labeling the meetings as a promising first step. Bessent, last week, expressed his priority was reducing tensions, given the stalemate since the tariff escalation. “Our Chinese counterparts are formidable negotiators,” Greer praised, describing their efforts as diligent and the discussions over the last two days as “highly constructive.” Bessent noted that they had briefed President Trump, who was “fully informed.” Ahead of the negotiations, Trump indicated a potential tariff reduction to 80%, posting that it was “up to Scott B.,” referring to Bessent, though the White House emphasized that China needed to make concessions too.
Chinese Vice Premier He Lifeng echoed the sentiments of “substantial progress” with the announcement of an “important consensus.” Labeling the talks as “candid, in-depth, and constructive,” he shared that both nations agreed to implement a “trade consultation mechanism” for further dialogues. “We aim to finalize the pertinent details swiftly and release a joint agreement statement on May 12,” a briefing from the Chinese delegation confirmed.
This weekend’s progress signifies a crucial step towards easing the trade tensions between the US and China. The existing 145% tariffs have drastically reduced US-bound shipments from China by 60%, according to Ryan Petersen, CEO of Flexport. Even cutting the tariffs in half might not immediately impact trade volumes, with economists suggesting that even a 50% rate is a critical threshold for restoring somewhat normal business flows. The tariff repercussions have begun inflating prices in the US, with Goldman Sachs analysts predicting a potential rise in a key inflation measure to 4% by the year’s end due to the trade conflict. Even if a trade agreement is finalized, price effects may not improve quickly due to goods arriving under the existing tariffs.
Chinese imports are deeply woven into American life, from footwear and clothing to electronics and toys, yet the current scenario has led to a decline in their influx. According to the National Retail Federation, US imports in the latter half of 2025 are projected to fall by at least 20% year over year, with a sharper 75% to 80% drop expected from China per JPMorgan analysts. The trade dispute has already taken a toll on the US economy, evidenced by America’s first quarterly GDP contraction since early 2022, driven by businesses rushing to import goods ahead of severe tariff impositions. China’s economy is also feeling the pinch, with US export numbers dropping sharply and manufacturing activity contracting rapidly, highlighting Beijing’s motive to introduce fresh economic incentives.
The Geneva talks kindled hopes for a thaw between these two economic giants, which rank as the world’s largest and second-largest economies, dwarfing even the next 20 largest economies combined, per World Bank statistics. During these diplomatic dialogues, President Trump mentioned his intention to include the case of Hong Kong media tycoon Jimmy Lai in the negotiations. Lai, a former publisher with a contentious history towards Beijing, could face life imprisonment in an ongoing national security trial. However, it’s uncertain if US negotiators raised Lai’s situation with Chinese officials during the talks.