By Reshma Kapadia
Just as the market's patience wore thin with a second day of losses, the U.S. said Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer are slated to meet with Chinese officials for the first time since a trade war began between the two countries.
U.S. and Chinese officials are headed to the negotiating table in Switzerland to de-escalate a situation that had shut down trade between the two countries. President Donald Trump imposed 145% tariffs on Chinese goods, and China retaliated with 125% tariffs, spooking markets and sparking a parade of executives and investors pushing the Trump administration to find an off-ramp. In its own statement, China's Ministry of Foreign Affairs said Vice Premier He Lifeng will meet with the U.S. officials in Geneva, Switzerland, noting he is "the Chinese lead person for China-U. S. economic and trade affairs."
The announcement of talks in Switzerland could represent a thaw in that frozen economic relationship. After insisting the other needed to go first before discussions could begin, both sides more recently had softened their rhetoric and hinted at the prospects for talks.
China watcher Andy Rothman, head of research firm Sinology, said news of a meeting between this level of officials was a welcome development but he will take a wait-and-see approach. "It's a real opportunity to see if Trump has authorized Bessent and Greer to negotiate and if they make clear what Trump is looking for, as well as what he is willing to offer in return." A continued concern among Chinese officials, Rothman said, was on display earlier in the day when Trump met with Canadian Prime Minister Mark Carney and said that there was nothing the Canadian leader could say to get the U.S. to lift tariffs on its northern neighbor. A couple of hours before the meetings with Chinese officials were announced, hedge fund manager Bill Ackman, head of Pershing Square, on X posted a recommendation to the Trump administration on easing trade tensions. He suggested immediately reducing China tariffs to 20% and then escalating them by 0.5% a month for the next 12 months and 1% a month for the following 12 months, and ratcheting them further from there. "To the extent that China modifies its unfair trade practices, the increases could stop and potentially be reversed depending upon the degree of improvement in its trade policies," Ackman wrote. "This approach would incentivize companies to relocate their supply chains from China while enabling them to continue to operate profitably during the transition. China would be incentivized to make a good deal with [Trump] as promptly as practicable while the risk of a dramatic shock to the U.S. and global economies would be greatly reduced if not eliminated." Others though point to the geopolitical and economic rivalry between the two countries and the host of structural problems -- as well as the Trump administration's focus on upending the economic order -- as a reason the trade war between the two countries is unlikely to end quickly. They say the dispute could continue even if there is some relief from the current level of tariffs.
Jens Nordvig, head of macro consulting research firm Exante Data, told Barron's this week markets are focused on where the trade battle ends up. His expectation: Tariffs with China end up in the 40% to 60% range, possibly with exemptions on some items and higher tariffs in areas related to national security. Write to Reshma Kapadia at reshma.kapadia@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 06, 2025 19:49 ET (23:49 GMT)
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