US claims ‘substantial progress' after trade talks with China

Irish Times

12-05-2025

US Treasury secretary Scott Bessent said the US made 'substantial progress' over two days of trade talks with Chinese officials in Geneva, in the first sign that Washington and Beijing might start to ratchet down economic tensions.
'We will be giving details tomorrow, but I can tell you that the talks were productive,'|Mr Bessent told reporters on Sunday after he and US trade representative Jamieson Greer finished their meetings with Chinese vice-premier He Lifeng.
Mr Greer said it was 'important to understand how quickly we were able to come to agreement, which reflects that perhaps the differences were not so large as maybe thought' and added that there had been a 'lot of groundwork'.
The optimistic comments from the US negotiating team were the first sign that the two countries might de-escalate the trade war that has roiled financial markets and triggered concerns about global supply chains.
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US futures for the S&P 500 and Nasdaq rose 1.5 per cent and 2 per cent, respectively.
Haven assets sold off during trading in Asia, with gold shedding 1.4 per cent and 10-year US Treasury bond yields climbing 0.02 percentage points to 4.40 per cent. Bond yields move inversely to prices.
Hong Kong's Hang Seng index rose 0.9 per cent while mainland China's benchmark CSI 300 index climbed 0.6 per cent.
The US dollar strengthened 0.3 per cent against a basket of its peers while the Swiss franc and Japanese yen, both haven currencies, weakened 0.3 per cent and 0.4 per cent, respectively.
The US has placed a 145 per cent tariff on goods from China while Beijing has retaliated with its own 125 per cent levy.
Following the first day of talks on Saturday, Mr Trump posted on his Truth Social platform that the US and China had made 'great progress'. He added: 'A total reset negotiated in a friendly, but constructive manner.'
In Geneva, Mr Greer said the agreement with the Chinese would help ease trade tensions.
'The [US] has a massive $1.2 trillion trade deficit (€1.06) [with the world], so the president declared a national emergency and imposed tariffs, and we're confident that the deal we struck with our Chinese partners will help us to work towards resolving that national emergency.'
Mr He, the Chinese vice-premier, said he had held 'candid, in-depth and constructive' talks with his US counterparts and that an 'important consensus' had been reached, according to state-run news agency Xinhua. According to Xinhua, Mr He announced that China and the US had agreed to create a mechanism to hold further talks on trade and economic issues.
The US and Chinese negotiating teams met at the Geneva residence of the Swiss ambassador to the UN.
Until recently, there were few signs that either country was prepared to negotiate. Chinese officials had told Washington that Mr Trump's tariffs on China amounted to economic bullying and warned that Beijing would not capitulate in the same way as other countries that had rushed to negotiate with Washington.
However, following a fall in the bond market and signs that the volume of trade with China was plummeting, Mr Bessent publicly warned that the situation was not sustainable.
Last week, he stressed that both sides had a 'shared interest' in de-escalation since the level of tariffs imposed in both directions 'isn't sustainable'. He previously said that the high tariffs amounted to an effective trade embargo with China.
Chinese state media have made fun of what they said were US flip-flops on trade talks and the eagerness of Mr Trump to hold negotiations.
A social media account affiliated with China's state broadcaster CCTV said that the US had 'repeatedly jumped back and forth' and was trying to contact China through 'various channels' to jump-start talks.
Since the start of the trade war, officials and economic experts in both countries have also argued that the other side was more vulnerable.
Mr Bessent said China faced economic challenges and had more incentive to come to the table. But the Trump administration became more concerned following warnings from Wall Street and after Walmart and Target told Mr Trump that retail store shelves would become empty.
Yang Panpan of the state-affiliated Chinese Academy of Social Sciences said the US negotiating position this time was weaker, given a weakening dollar and sinking international investor confidence in America.
'Inflation is a major challenge [for the US],' Ms Yang said. 'Financial market instability is another challenge . . ...red to the past, these concerns have intensified.' - Add–tional reporting by William Sandlund in Hong Kong and Leo Lewis in Tokyo
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