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Economic Times
10-05-2025
- Business
- Economic Times
As US, China begin trade talks in Geneva, Trump's tariff hammer looks less mighty than he claims
The way President Donald Trump sees it, beating China in a trade war should be easy. After all, his logic goes, the Chinese sell Americans three times as much stuff as Americans sell them. Therefore, they have more to lose. Inflict enough pain, like the combined 145% taxes he slapped on Chinese imports last month, and they'll beg for mercy. Trump's treasury secretary, Scott Bessent has confidently compared Beijing to a card player stuck with a losing hand. "They're playing with a pair of twos,'' he said. Somebody forgot to tell China. So far, the Chinese have refused to fold under the pressure of Trump's massive tariffs. Instead, they have retaliated with triple-digit tariffs of their own. "All bullies are just paper tigers,'' the Chinese Foreign Ministry declared in a video last week. "Kneeling only invites more bullying.'' The stakes are high between the world's two biggest economies whose trade topped $660 billion last year. Bessent and Trump's top trade negotiator, Jamieson Greer, are heading to Geneva this weekend for initial trade talks with top Chinese officials. Trump suggested Friday that the U.S. could lower its tariffs on China, saying in a Truth Social post that "80% Tariff seems right! Up to Scott.? While businesses and investors welcome any easing of tensions, the prospects for a quick and significant breakthrough appear dim. "These are talks about talks, and China may be coming to assess what's on the table - or even just to buy time," said Craig Singleton, senior China fellow at the Washington-based think tank Foundation for Defense of Democracies. "There's no shared roadmap or clear pathway to de-escalation." But if the two countries eventually agree to scale back the massive taxes - tariffs - they have slapped on each other's goods, it would relieve world financial markets and companies on both sides of the Pacific Ocean that depend on US-China trade. "The companies involved in this trade on both sides just cannot afford waiting anymore," said economist John Gong of the University of International Business and Economics in Beijing. In a worst-case scenario, China could walk away from the negotiations if it feels the US side isn't treating China as an equal or isn't willing to take the first step to deescalate, Gong said. "I think if (Bessent) doesn't go into this negotiation with this kind of mindset, this could be very difficult," he said. For now, the two countries can't even agree on who requested the talks. "The meeting is being held at the request of the U.S. side,'' Chinese Foreign Ministry spokesperson Lin Jian said Wednesday. Trump disagreed. "They ought to go back and study their files," he said. What seems clear is that Trump's favorite economic weapon - import taxes, or tariffs - has not proved as mighty as he'd hoped. "For Trump, what's happened here is that the rhetoric of his campaign has finally had to face economic reality," said Jeff Moon, a trade official in the Obama administration who now runs the China Moon Strategies consultancy. "The idea that he was going to bring China to its knees in terms of tariffs was never going to work.'' Trump views tariffs an all-purpose economic tool that can raise money for the US Treasury, protect American industries, lure factories to the United States and pressure other countries to bend to his will, even on issues such as immigration and drug trafficking. He used tariffs in his first term and has been even more aggressive and unpredictable about imposing them in his second. He's slapped a 10% tariff on almost every country in the world, blowing up the rules that had governed global trade for decades. But it's his trade war with China that has really put markets and businesses on edge. It started in February when he announced a 10% levy on Chinese imports. By April, Trump ratcheted up the taxes on China to a staggering 145%. Beijing upped its tariff on American products to 125%. Trump's escalation sent financial markets tumbling and left U.S. retailers warning that they might run out of goods as U.S.-China trade implodes. U.S. consumers, worried about the prospect of empty shelves and higher prices, are losing confidence in the economy. "This was not very well planned,'' said Zongyuan Zoe Liu, senior fellow in China studies at the Council on Foreign Relations. "I don't think he intended to have the tariffs escalate into this chaos.'' When Trump hit Chinese imports with tariffs during his first term, he charged that Beijing used unfair tactics, including cybertheft, to give its technology firms an edge. The two countries reached a truce - the so-called Phase One agreement - in January 2020; China agreed to buy more U.S. products, and Trump held off on even higher tariffs. But they didn't resolve the big issues dividing them, including China's subsidies of homegrown tech firms. China was ready for a rematch when Trump returned to the White House. It had worked to reduce its dependence on America's massive market, cutting the U.S. share of its exports to 15% last year from more than 19% in 2018, according to Dexter Roberts of the Atlantic Council. Beijing is confident that the Chinese people are more willing than Americans to endure the fallout from a trade war, including falling exports and shuttered factories. "For China, it's painful, but it's also imperative to withstand it, and it's prepared to cope with it,'' said Sun Yun, director of the China program at the Stimson Center. In addition to miscalculating Chinese resolve, the Trump administration may have underestimated how much America relies on China. For decades, Americans have come to depend on Chinese factories. They produce 97% of America's imported baby carriages, 96% of its artificial flowers and umbrellas, 95% of its fireworks, 93% of its children's coloring books and 90% of its combs. "Without us, what do they have to sell?" Chinese toymaker Cheng Zhengren told Beijing News. "Their shelves would be empty." The showerhead company Afina last month reported on an experiment suggesting that American consumers have little willingness to pay more for American-made products. Afina makes a filtered showerhead in China and Vietnam that retails for $129. Making the same product in America would lift the price to $239. When customers on the company's website were given a choice between them, 584 chose the cheap Asian one; not one opted for the costlier U.S.-made version. And it's not just consumers who depend on China. America's own factories do, too. The National Association of Manufacturers calculates 47% of U.S. imports from China in 2023 were "manufacturing inputs'' - industrial supplies, auto parts and capital equipment that American manufacturers used to make other their own products domestically. So Trump's tariffs risk raising costs and reducing supplies that U.S. factories rely on, making them less competitive. Louise Loo, China economist at Oxford Economics, a consulting firm, said that China's ability to reduce its dependence on the U.S. market in recent years means "they're probably likely to be able to find substitutes for buyers, much easier than the U.S. side will be able to find suppliers." Still, China won't emerge from a trade war unscathed either. Citing the impact of the trade war, the International Monetary Fund last month downgraded the outlook for the Chinese economy this year and next. "China needs the United States of America," White House press secretary Karoline Leavitt said at Friday's news briefing. "They need our markets. They need our consumer base. And Secretary Bessent knows that he's going to Switzerland this weekend with the full support and confidence and trust of the president here at home." Indeed Moon, who also served as a diplomat in China, noted the tariffs cut both ways: "Both of them are highly dependent on bilateral trade. They have put themselves in a corner.'' Jens Eskelund, president of the EU Chamber of Commerce in China, expressed relief that U.S. and Chinese officials were meeting. "So good,'' he said, pointing to the Vatican conclave that just picked a new pope as inspiration. "Lock them in a room and then hopefully white smoke will come out."
10-05-2025
- Business
As US and China begin trade talks in Geneva, Trump's tariff hammer looks less mighty than he claims
WASHINGTON -- The way President Donald Trump sees it, beating China in a trade war should be easy. After all, his logic goes, the Chinese sell Americans three times as much stuff as Americans sell them. Therefore, they have more to lose. Inflict enough pain, like the combined 145% taxes he slapped on Chinese imports last month, and they'll beg for mercy. Trump's treasury secretary, Scott Bessent has confidently compared Beijing to a card player stuck with a losing hand. 'They're playing with a pair of twos,'' he said. Somebody forgot to tell China. So far, the Chinese have refused to fold under the pressure of Trump's massive tariffs. Instead, they have retaliated with triple-digit tariffs of their own. 'All bullies are just paper tigers,'' the Chinese Foreign Ministry declared in a video last week. 'Kneeling only invites more bullying.'' The stakes are high between the world's two biggest economies whose trade topped $660 billion last year. Bessent and Trump's top trade negotiator, Jamieson Greer, are heading to Geneva this weekend for initial trade talks with top Chinese officials. Trump suggested Friday that the U.S. could lower its tariffs on China, saying in a Truth Social post that '80% Tariff seems right! Up to Scott.″ While businesses and investors welcome any easing of tensions, the prospects for a quick and significant breakthrough appear dim. 'These are talks about talks, and China may be coming to assess what's on the table — or even just to buy time,' said Craig Singleton, senior China fellow at the Washington-based think tank Foundation for Defense of Democracies. 'There's no shared roadmap or clear pathway to de-escalation.' But if the two countries eventually agree to scale back the massive taxes — tariffs — they have slapped on each other's goods, it would relieve world financial markets and companies on both sides of the Pacific Ocean that depend on U.S.-China trade. 'The companies involved in this trade on both sides just cannot afford waiting anymore,' said economist John Gong of the University of International Business and Economics in Beijing. In a worst-case scenario, China could walk away from the negotiations if it feels the U.S. side isn't treating China as an equal or isn't willing to take the first step to deescalate, Gong said. 'I think if (Bessent) doesn't go into this negotiation with this kind of mindset, this could be very difficult,' he said. For now, the two countries can't even agree on who requested the talks. 'The meeting is being held at the request of the U.S. side,'' Chinese Foreign Ministry spokesperson Lin Jian said Wednesday. Trump disagreed. 'They ought to go back and study their files,' he said. What seems clear is that Trump's favorite economic weapon — import taxes, or tariffs — has not proved as mighty as he'd hoped. 'For Trump, what's happened here is that the rhetoric of his campaign has finally had to face economic reality,' said Jeff Moon, a trade official in the Obama administration who now runs the China Moon Strategies consultancy. 'The idea that he was going to bring China to its knees in terms of tariffs was never going to work.'' Trump views tariffs an all-purpose economic tool that can raise money for the U.S. Treasury, protect American industries, lure factories to the United States and pressure other countries to bend to his will, even on issues such as immigration and drug trafficking. He used tariffs in his first term and has been even more aggressive and unpredictable about imposing them in his second. He's slapped a 10% tariff on almost every country in the world, blowing up the rules that had governed global trade for decades. But it's his trade war with China that has really put markets and businesses on edge. It started in February when he announced a 10% levy on Chinese imports. By April, Trump ratcheted up the taxes on China to a staggering 145%. Beijing upped its tariff on American products to 125%. Trump's escalation sent financial markets tumbling and left U.S. retailers warning that they might run out of goods as U.S.-China trade implodes. U.S. consumers, worried about the prospect of empty shelves and higher prices, are losing confidence in the economy. 'This was not very well planned,'' said Zongyuan Zoe Liu, senior fellow in China studies at the Council on Foreign Relations. 'I don't think he intended to have the tariffs escalate into this chaos.'' When Trump hit Chinese imports with tariffs during his first term, he charged that Beijing used unfair tactics, including cybertheft, to give its technology firms an edge. The two countries reached a truce — the so-called Phase One agreement — in January 2020; China agreed to buy more U.S. products, and Trump held off on even higher tariffs. But they didn't resolve the big issues dividing them, including China's subsidies of homegrown tech firms. China was ready for a rematch when Trump returned to the White House. It had worked to reduce its dependence on America's massive market, cutting the U.S. share of its exports to 15% last year from more than 19% in 2018, according to Dexter Roberts of the Atlantic Council. Beijing is confident that the Chinese people are more willing than Americans to endure the fallout from a trade war, including falling exports and shuttered factories. 'For China, it's painful, but it's also imperative to withstand it, and it's prepared to cope with it,'' said Sun Yun, director of the China program at the Stimson Center. In addition to miscalculating Chinese resolve, the Trump administration may have underestimated how much America relies on China. For decades, Americans have come to depend on Chinese factories. They produce 97% of America's imported baby carriages, 96% of its artificial flowers and umbrellas, 95% of its fireworks, 93% of its children's coloring books and 90% of its combs. 'Without us, what do they have to sell?' Chinese toymaker Cheng Zhengren told Beijing News. 'Their shelves would be empty.' The showerhead company Afina last month reported on an experiment suggesting that American consumers have little willingness to pay more for American-made products. Afina makes a filtered showerhead in China and Vietnam that retails for $129. Making the same product in America would lift the price to $239. When customers on the company's website were given a choice between them, 584 chose the cheap Asian one; not one opted for the costlier U.S.-made version. And it's not just consumers who depend on China. America's own factories do, too. The National Association of Manufacturers calculates 47% of U.S. imports from China in 2023 were 'manufacturing inputs'' — industrial supplies, auto parts and capital equipment that American manufacturers used to make other their own products domestically. So Trump's tariffs risk raising costs and reducing supplies that U.S. factories rely on, making them less competitive. Louise Loo, China economist at Oxford Economics, a consulting firm, said that China's ability to reduce its dependence on the U.S. market in recent years means 'they're probably likely to be able to find substitutes for buyers, much easier than the U.S. side will be able to find suppliers.' Still, China won't emerge from a trade war unscathed either. Citing the impact of the trade war, the International Monetary Fund last month downgraded the outlook for the Chinese economy this year and next. 'China needs the United States of America,' White House press secretary Karoline Leavitt said at Friday's news briefing. 'They need our markets. They need our consumer base. And Secretary Bessent knows that he's going to Switzerland this weekend with the full support and confidence and trust of the president here at home.' Indeed Moon, who also served as a diplomat in China, noted the tariffs cut both ways: 'Both of them are highly dependent on bilateral trade. They have put themselves in a corner.'' Jens Eskelund, president of the EU Chamber of Commerce in China, expressed relief that U.S. and Chinese officials were meeting. 'So good,'' he said, pointing to the Vatican conclave that just picked a new pope as inspiration. 'Lock them in a room and then hopefully white smoke will come out.' ___ AP Staff Writers Christopher Rugaber, Seung Min Kim and Josh Boak in Washington, Ken Moritsugu in Beijing and Simina Mistreanu in Taipei contributed to this story.
Business Times
03-05-2025
- Business
- Business Times
China hints at possible thaw with US in weighing trade talks
[BEIJING] China said it is assessing the possibility of trade talks with the US, the first sign since US President Donald Trump hiked tariffs last month that negotiations could begin between the two sides. China's Commerce Ministry said in a Friday (May 2) statement that it had noted senior US officials repeatedly expressing their willingness to talk to Beijing about tariffs, and urged officials in Washington to show 'sincerity' towards China. 'The US has recently sent messages to China through relevant parties, hoping to start talks with China,' the ministry added. 'China is currently evaluating this.' Futures on the S&P 500 Index erased early losses in Asia soon after the statement, and a gauge of regional equities rallied to its highest level in more than a month. The Hang Seng China Enterprises Index finished almost 2 per cent higher in Hong Kong, while mainland markets were shut due to a holiday. The statement signalled the stalemate between the world's two largest economies could shift, after Trump hiked US tariffs to the highest level in a century and Beijing retaliated in kind. Trump repeatedly said China President Xi Jinping needs to contact him in order to begin tariff talks. Earlier this week, Treasury Secretary Scott Bessent said it's up to Beijing to take the first step to de-escalate the dispute. John Gong, a former consultant to China's Commerce Ministry, likened the latest gesture to 'the first rain after a long drought'. It suggests 'there's a go-ahead from the very top of the leadership in China,' according to Gong, who's now a professor at the University of International Business and Economics in Beijing. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'They are preparing for the negotiation, who's going to lead the negotiation, what would be the strategy, what is the model like to deal with Washington,' he told Bloomberg Television. 'All these things are currently probably being intensively debated and discussed right now.' The economic fallout from the confrontation may be giving new momentum to efforts to bring both sides to the negotiating table. The US economy contracted at the start of the year largely because of a monumental surge of imports to get ahead of the tariffs that have roiled global financial markets and caused consumer confidence to plummet. In China, factory activity slipped into the worst contraction since December 2023, the official manufacturing purchasing managers' index showed this week. New export orders fell to the lowest since December 2022 and recorded the biggest drop since April that year, when Shanghai entered a citywide pandemic lockdown. But hurdles still lie ahead. Beijing has been looking for the US to appoint a point person for talks who has Trump's support and can help prepare a deal that the American president and the Chinese leader can sign when they meet. And while countries such as India and Japan seek out their own agreements with the US, China risks finding itself increasingly isolated as the sole major economy not to mount a campaign to strike a deal. 'The high level of reciprocal tariffs on China is not sustainable, so the market expects the US and China to start negotiating at some point,' said Woei Chen Ho, an economist at UOB. 'The beginning of negotiations will likely drive market volatility again because it is not expected to be plain sailing.' A surprise reshuffle by Trump on Thursday may complicate bilateral relations by expanding the portfolio of Secretary of State Marco Rubio, the first person in his post to be sanctioned by Beijing. The US president announced Rubio will serve as interim national security adviser while keeping his job as secretary of state. Michael Waltz, his current national security adviser, is set to be nominated to be the next US ambassador to the United Nations. The dual role created for Rubio will amplify his voice on issues of key concern to Beijing including Taiwan, a self-ruled island democracy that China claims as its territory. The top US diplomat has previously pledged to address Beijing's 'destabilising actions' in the South China Sea. Speaking in an interview with Fox News' Sean Hannity broadcast on Thursday night, Rubio said China is looking for a 'short-term accommodation' with the US and claimed the duties are taking a huge toll on its economy. 'The Chinese are reaching out,' Rubio said. 'They want to meet, they want to talk.' 'It's in the interest of both economies to lower the temperature, to create breathing space to continue talking, to figure out how we can get to a new stable equilibrium on trade,' US Council of Economic Advisers chair Stephen Miran said in a Friday interview with Bloomberg Television. 'So, I would be surprised if tariff rates are where they are now, you know, within a few weeks from now.' Representatives for the Office of the US Trade Representative and the departments of Treasury and Commerce didn't respond to requests for comment. Rubio's increasing prominence in the Trump administration is unlikely to unsettle ties given Commerce Secretary Howard Lutnick's importance and the involvement of Trump himself, according to Frank Lavin, a former US undersecretary of commerce for international trade. 'There will be some kind of conversation that will start and I think that will start within a few days,' he said on Bloomberg Television. 'Both sides want some kind of resolution or at least a reduction in tension.' While expressing a newfound openness to talks, China's Commerce Ministry framed its statement on Friday as being consistent with Beijing's previous position. As a condition to negotiations, it asked the US to 'show its sincerity and be prepared to correct its wrong practices' by scrapping the unilateral tariffs. 'If we fight, we will fight to the end; if we talk, the door is open,' it said. 'What China wants to emphasise is that in any possible dialogue or talks, if the US does not correct its wrong unilateral tariff measures, it means that the US has no sincerity at all and will further damage the mutual trust between the two sides.' BLOOMBERG
Time of India
02-05-2025
- Business
- Time of India
China mulls opening communication lines with US on trade
Beijing said it is assessing the possibility of trade talks with Washington, the first sign since Donald Trump hiked tariffs last month that negotiations could begin between the two sides. #Pahalgam Terrorist Attack Pakistan reopens Attari-Wagah border to allow stranded citizens in India to return Key Jammu & Kashmir reservoirs' flushing to begin soon Air India sees Pakistan airspace ban costing it $600 mn over 12 months China's commerce ministry said in a Friday statement that it had noted senior US officials repeatedly expressing their willingness to talk to Beijing about tariffs, and urged officials in Washington to show "sincerity" toward China. "The US has recently sent messages to China through relevant parties, hoping to start talks with China," it added. "China is currently evaluating this." Futures on the S&P 500 Index erased early losses in Asia soon after the statement, and a gauge of regional equities rallied to its highest level in more than a month. The Hang Seng China Enterprises Index finished almost 2% higher in Hong Kong, while mainland markets were shut due to a holiday. 5 5 Next Stay Playback speed 1x Normal Back 0.25x 0.5x 1x Normal 1.5x 2x 5 5 / Skip Ads by by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Binh Trung Dong: Beautiful New Senior Apartments with Two Bedrooms Senior Apartments | Search Ads Search Now Undo Shift in stalemate? The statement signaled the stalemate between the world's two largest economies could shift, after Trump hiked US tariffs to the highest level in a century and Beijing retaliated in kind. Trump has repeatedly said President Xi Jinping needs to contact him in order to begin tariff talks. Earlier this week, treasury secretary Scott Bessent said it's up to Beijing to take the first step to de-escalate the dispute. John Gong, a former consultant to China's commerce ministry, likened the latest gesture to "the first rain after a long drought." It suggests "there's a go-ahead from the very top of the leadership in China," according to Gong, who's now a professor at the University of International Business and Economics in Beijing. Live Events The economic fallout from the confrontation may be giving new momentum to efforts to bring both sides to the negotiating table. The US economy contracted at the start of the year largely because of a monumental surge of imports to get ahead of the tariffs that have roiled global financial markets and caused consumer confidence to plummet. Weakness in parameters In China, factory activity slipped into the worst contraction since December 2023, the official manufacturing purchasing managers' index showed this week. New export orders fell to the lowest since December 2022 and recorded the biggest drop since April that year, when Shanghai entered a citywide Covid lockdown.
Bloomberg
02-05-2025
- Business
- Bloomberg
China, US May Inch Closer to Talks After Trump Tariffs
China's announcement that it is evaluating the possibility of trade talks with the US has likely been endorsed at the highest levels of leadership, according to Professor John Gong from Beijing's University of International Business and Economics. The recent statement from China's Commerce Ministry marks the first indication of a possible thaw in relations since Donald Trump increased tariffs last month. Professor Gong speaks on Bloomberg's The China Show. (Source: Bloomberg)
