As Trump administration officials prepare to meet with Chinese officials in Geneva this weekend, it’s tempting to believe the momentum from the United Kingdom trade deal announcement on Thursday will carry over. Don’t hold your breath. “I’m keeping my expectations in check. Tariffs are high. Tensions are high. It’s easier to impose tariffs than to unwind them,” said Wendy Cutler, a former US trade negotiator who is now vice president of the Asia Society Policy Institute. President Donald Trump despises trade deficits — a situation when the US buys more from another country than it sells. In his view, it’s a sign that America is being “ripped off” and treated unfairly. (Economists are much less convinced of his argument.) Since China is the world’s second-largest economy and a manufacturing supercenter, it’s perhaps unsurprising that, across all trading partners, the US ran the largest trade deficit with Beijing last year, at nearly $300 billion. Trump has therefore levied the steepest tariffs on China, with rates starting at a whopping 145% for most products. China responded by slapping a minimum tariff of 125% on most US goods. Both countries’ economies are poised to take massive hits from the trade war, and bruises are already beginning to appear on both sides. Investors and many businesses and consumers from both countries are eager to see the situation improve and are holding out hope that the weekend talks, which mark the first official dialogue between top US and Chinese government officials during Trump’s second term, will help. But it could quickly turn south, too. Trump’s deal with the UK is hardly a great starting point for trade talks with China Cutler anticipates that Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer, who are meeting with Chinese Vice Premier He Lifeng on Saturday, will bring up the UK trade deal to show that “their policy is working” and also that other countries “have concerns with China.” Never mind that the scant details of the UK deal reveal it’s a relatively small win — if one at all. And it was also an agreement that was relatively easy to reach. It helps that the UK had much less to negotiate down, with tariffs on its exports starting at 10% — which, even after the “deal,” remain at those levels. Some cars from there are getting a slight break on tariffs, and the Trump administration seemed to imply other carveouts are on the table. Another positive: The US ran a $12 billion trade surplus with the UK last year. “It’s basically balanced trade,” Cutler told CNN. China, meanwhile, is “a different animal.” The best possible outcome Hardly anyone believes this first round of talks will bring US and Chinese tariffs back to where they were before Trump’s second term. That includes Bessent, who told Fox News earlier this week: “My impression is that this weekend’s discussions will focus on de-escalation rather than a significant trade agreement.” Trump even outright said he wouldn’t consider lowering tariffs to get China to the negotiating table on Wednesday. But on Thursday, citing unnamed sources, the New York Post reported that the Trump administration was considering plans to cut tariffs on China to as low as 50% as soon as next week. In that regard, it’s a positive sign that Trump said on Thursday he wasn’t considering levying even higher tariffs on Chinese goods. “You can’t get any higher. It’s at 145, so we know it’s coming down,” Trump said in the Oval Office after announcing the UK trade deal. Bessent’s comments about de-escalation stood out to Susan Shirk, a research professor at the UC San Diego School of Global Policy and Strategy and director emeritus of its 21st Century China Center. “What that suggests is that this decoupling, this extreme level of tariffs, is going to move in the direction of coming down either to zero or to some minimal level on both sides,” Shirk said. Chinese President Xi Jinping and his administration, she said, are acting in a more disciplined manner compared to previous talks with the US. That suggests to her that “they’re not likely to mess it up.” “They’re skeptical of Trump, and so they’re going to be very careful, which I think puts the right kind of pressure on President Trump,” she said. Shirk said she’s hoping China demonstrates how “they are making a good faith effort to reduce the flood of exports going not just to the United States but all these other countries.” In Cutler’s view, the best possible realistic outcome of the weekend talks would be if both sides leave with “a process for further engagement,” she said. Chief among those would be getting the ball rolling on a call between Trump and Xi. Trump suggested he’d consider speaking with Xi on Thursday depending on how the weekend talks go. The worst possible outcome In contrast, the sky is the limit for how bad these talks could go and the actions both governments could take as a result. Both Cutler and Shirk agreed one of the worst-case scenarios would mirror the 2021 talks Biden administration officials held with Chinese officials in Alaska. That quickly became disastrous for both sides as officials had a very public spat with one another using harsh rhetoric in front of a slew of journalists invited to cover what was initially intended to be brief opening remarks. “The worst thing that could happen is kind of a big blowup, and the media is there to report it,” Shirk said. “That’s exactly the type of meeting one wants to avoid,” said Cutler, who also served as acting deputy USTR in the Obama administration. Alaska repeats aside, the worst possible outcome, she said, is for the US and China to “stake out their hard-line positions and not find common ground to move forward,” which would open the door for even higher tariffs to be imposed.
The UK trade agreement was the easy part. China will be exponentially harder
TruthLens AI Suggested Headline:
"U.S.-China Trade Talks Face Significant Challenges Amid High Tariffs and Tensions"
CNN
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TruthLens AI Summary
As officials from the Trump administration prepare for significant trade discussions with their Chinese counterparts in Geneva, expectations are tempered by the complexities surrounding U.S.-China relations. The recent announcement of a trade deal with the United Kingdom has generated some optimism, but experts caution that the situation with China is fundamentally different. Wendy Cutler, a former U.S. trade negotiator, emphasizes the high tariffs currently in place and the escalating tensions between the two nations. With the U.S. facing a staggering trade deficit of nearly $300 billion with China last year, President Trump has imposed steep tariffs, some reaching 145%. In retaliation, China has also levied its own tariffs on U.S. goods. The potential impacts of this trade war are already being felt in both economies, with businesses and consumers on both sides hoping for a resolution during the upcoming talks. However, Cutler and others believe that significant progress is unlikely, with the focus expected to be on de-escalation rather than a comprehensive trade agreement.
The talks are particularly critical as they mark the first official dialogue between U.S. and Chinese officials during Trump's second term. While there have been hints from the Trump administration about potentially reducing tariffs, the likelihood of a swift return to pre-Trump trade conditions remains low. Experts note that the Chinese government is adopting a more disciplined approach compared to previous negotiations, which could influence the outcome positively. The best-case scenario for the discussions would involve establishing a framework for ongoing engagement between the U.S. and China, potentially leading to a direct conversation between Trump and Chinese President Xi Jinping. However, the worst-case scenario involves a repeat of past contentious meetings, where both sides fail to find common ground, risking further escalation of tariffs and deteriorating relations. The stakes are high, and both nations are keenly aware that the outcome of these talks could have far-reaching consequences for global trade dynamics.
TruthLens AI Analysis
The article sheds light on the complexities surrounding the upcoming trade negotiations between the United States and China, especially in the context of the recently signed trade agreement with the United Kingdom. It emphasizes the challenges that the Trump administration may face as it attempts to navigate its relationship with China, which is characterized by high tariffs and tense economic relations.
Expectation Management
The piece mentions Wendy Cutler, a former US trade negotiator, who advises caution regarding expectations for the talks in Geneva. This is significant as it illustrates a broader sentiment among analysts and experts who believe that the challenges with China are far more pronounced than those experienced with the UK. The high tariffs imposed by both nations—145% by the US and 125% by China—underscore the difficulty in reaching a mutually beneficial agreement, suggesting that the UK deal might not provide a template for success with China.
Framing Trade Deficits
The article discusses Trump's perspective on trade deficits, highlighting his belief that they represent unfair treatment of the US. This framing is critical as it reflects a populist narrative that resonates with certain segments of the American public, who may feel economically marginalized. However, the article contrasts Trump's views with those of economists, indicating a division between political rhetoric and economic theory.
Investor Sentiment
There is a clear concern for the economic repercussions of the ongoing trade war, with investors, businesses, and consumers eager for improvement. This sentiment indicates a recognition of the interconnectedness of global economies and the potential for widespread damage from prolonged trade disputes. The urgency for resolution may influence the negotiations, as stakeholders from both nations are pushing for a positive outcome.
Implications for the Future
The article hints at potential negative outcomes from the talks, suggesting that despite the hope for improvement, the situation may deteriorate. This possibility can have broader implications for economic stability, not only in the US and China but also globally, as the trade war has far-reaching effects on supply chains and international markets.
Target Audience
The language and focus of the article seem to cater to a politically aware audience that is interested in international relations and economic policy. It appeals to those concerned about the implications of trade policies on their lives, businesses, and investments.
In terms of reliability, the article presents a balanced view by incorporating expert opinions, which adds credibility. However, it also reflects a particular political narrative that may influence readers' perceptions of the trade negotiations. The article does not appear to utilize artificial intelligence in its writing, as it maintains a human perspective on complex geopolitical issues.
Overall, the news piece serves to inform readers about the intricate dynamics between the US and China, while subtly managing expectations regarding the negotiations. This leads to a nuanced understanding of the potential outcomes and the significant challenges ahead.