Latest news with #tradefriction
Washington Post
2 days ago
- Business
- Washington Post
In Japan, a U.S. security ally, anger over ‘tyrannical' steel treatment
SEOUL — For corporate Japan, America's treatment of its steel industry has been one blow after another. First, there were the objections to Nippon Steel's takeover of its U.S. rival, with Washington treating one of its closest friends as a national security threat and a bipartisan political football. Then, there was the reversal that would see the deal go through but with terms favorable to the United States. Rubbing salt into the wound, as he was hailing the agreement, President Donald Trump doubled his tariffs on steel imports to 50 percent — dealing another potential blow to a critical Japanese industry. Major Japanese outlets roundly condemned the new tariffs, not mincing words in assessing the situation. Japan's biggest newspaper, the Yomiuri, called the tariffs 'out of line.' The Nikkei, Japan's answer to the Wall Street Journal, described them as 'unacceptable.' A third paper, the Mainichi, called them 'irrational' and 'tyranny of a superpower.' Japan is no stranger to trade friction with America. But the takeover of an iconic U.S. company has resurfaced those tensions, and it could have lasting ramifications on corporate Japan and its willingness to invest in the United States, said Yuki Tatsumi, director of the Japan program at the Washington-based Stimson Center. 'I definitely think this will make Japanese businesses more cautious,' Tatsumi said. Nippon Steel first proposed to buy U.S. Steel in 2023 for about $14.9 billion. But the acquisition faced political backlash. Former President Joe Biden moved to block the sale, citing national security concerns. On the campaign trail, Trump called it a 'disaster,' but he has now reversed his position and is expected to make his final decision on the deal by Thursday. Although both sides have hailed the vague agreement — Nippon Steel touted it as a 'game changer' and Trump said U.S. Steel would still be 'controlled by the USA' — it is unclear exactly what that U.S. control would entail. Nippon Steel wants 100 percent control of U.S. Steel, and it views full ownership as necessary to protect its high-end technology and proprietary know-how. The few details that have emerged include an extraordinary move to grant the U.S. government a 'golden share,' which would allow Washington to retain oversight and veto power over certain corporate functions. The Japanese company had also previously agreed to a corporate board made up of a majority of U.S. citizens and an American chief executive. Earlier this month, it offered another $14 billion in investments to sweeten the deal for Trump. The company's representatives in Tokyo on Monday declined to comment on the details of the arrangement, citing ongoing negotiations. But what is clear, some analysts in Japan say, is that it would have been a far simpler transaction had it not fallen victim to the U.S. political calendar. U.S. Steel is headquartered in Pennsylvania, a swing state that was critical in the 2024 presidential election, and powerful steel union leaders opposed the deal. 'There shouldn't have been any need for something as complicated as a golden share in the first place,' said Shinichiro Ozaki, steel analyst at Daiwa Securities in Tokyo. 'This deal shouldn't have become such a political issue,' he added. 'But it ended up getting entangled with the election, and the opposition from the steelworkers' union added fuel to the fire.' Under the Biden administration, the Committee on Foreign Investment in the United States investigated the acquisition for potential national security implications. The controversy has raised concerns about American protectionism and what that means for Japanese companies looking to expand into the United States, analysts say. 'If you're sitting on the board of another Japanese company that's looking at making material investments in the USA and you've been watching Nippon Steel, you would be quite nervous,' said Nick Wall, Tokyo-based mergers and acquisitions expert at A&O Shearman. Still, Wall and others said the deal could end up being a win-win scenario for Nippon Steel and the Trump administration. For one, there is much at stake for the Japanese steel giant. It is facing intense competition in Asia and has no room for growth in the Japanese market. It already has deals with companies in the Middle East, Africa and South America, and the United States is a key part of its global expansion. 'That leaves the United States as the final missing piece,' said Katsuhiro Sato, corporate strategy expert at the Waseda Business School in Tokyo. 'Unless they fill in this piece, they can't truly call themselves a global steel company. … That's why they're so obsessed with this deal.' A golden-share scenario could be beneficial to the company depending on the details, experts say. Nippon Steel can fully acquire U.S. Steel if the golden share only comes with governance authority, rather than the right to receive higher dividends, according to experts. Plus, the Japanese steelmaker is probably betting that there is little chance that Washington will ever exercise its veto power, said Tomohisa Ishikawa, chief economist at the Japan Research Institute in Tokyo. 'From Nippon Steel's perspective, the only real way to support the argument that 'the U.S. government still maintains control' is through the use of a golden share,' Ishikawa said. 'It saves face for Trump. So it's like giving Trump the name, while Japan takes the substance.' The agreement also has become more important to Tokyo as Japanese industries grapple with uncertainties from U.S. tariffs on key products, including steel, aluminum and cars. Trump, who imposed a blanket tariff of 24 percent on Japan during his 'Liberation Day' blitz before lowering it to 10 percent while negotiations took place, wanted a swift trade deal with Tokyo. But Japanese officials are taking their time. Japan's economy minister, Ryosei Akazawa, met with Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick in Washington last week in their fourth round of trade negotiations. A breakthrough in the Nippon Steel deal could inject energy as the two countries are locked in tariff talks, analysts say. It would give Japan fresh leverage and a credible narrative, Ishikawa said: 'We're continuing to invest in your country, so please stop raising tariffs.' Japan had faced 25 percent levies on steel and aluminum products, which Trump then increased to 50 percent last week during his announcement in Pittsburgh. Trump told the audience at his rally that a higher tariff rate would 'even further secure the steel industry in the United States.' 'Nobody's going to be able to steal your industry,' Trump told them. 'At 25 percent, [foreign competitors] can sort of get over that fence. At 50 percent, they can no longer get over that fence.' If the Nippon Steel deal is finalized, the higher tariff rate would work in the company's favor, analysts say. It would make it extremely difficult for foreign steel to enter the U.S. market, and companies with production facilities inside the United States, like Nippon, would gain a huge advantage. 'This is carrot-and-stick rhetoric,' said Tatsumi, of Stimson Center. 'The implication is, 'Hey, Nippon Steel … whatever you take out of this venture in the U.S. will be saved from these taxes I'm going to slap on you, so it will be in your interest to keep that production capacity'.' But if the acquisition fails, the new rate would be devastating for Japanese firms, especially automakers with large operations in the United States that rely on steel imports. The final deal may fall short of Nippon Steel's initial hopes, said Kazuto Suzuki, economic security director at the Tokyo-based Institute of Geoeconomics. But reaching a resolution under Trump after nearly two years of limbo will be an important lesson to Japanese industries more broadly, he said. That takeaway, Suzuki said: 'Trump is negotiable. Biden was ideologically making decisions, but Trump is more flexible.' Tanaka reported from Tokyo.
Yahoo
3 days ago
- Business
- Yahoo
China says US is ‘provoking frictions' as tensions flare despite trade truce
China has accused the United States of 'provoking new economic and trade frictions' as it responded to US President Donald Trump's claims that Beijing had violated a trade truce agreed by the two nations last month, which paused their blistering tariff war. China was 'strictly implementing' the consensus of those trade talks, the Chinese Commerce Ministry said in a statement Monday, while blaming the US for taking steps that 'seriously undermine' the agreement. 'The United States has been unilaterally provoking new economic and trade frictions, exacerbating the uncertainty and instability of bilateral economic and trade relations,' the statement said. 'If the United States insists on its own way and continues to undermine China's interests, China will continue to take resolute and forceful measures to safeguard its legitimate rights and interests,' it added. The comments come after Trump on Friday said China had 'TOTALLY VIOLATED ITS AGREEMENT WITH US.' In a post on Truth Social, the US president said that he made a fast deal with China to 'save them from what I thought was going to be a very bad situation.' He added: 'So much for being Mr. NICE GUY!' The back and forth spotlights a ratcheting up of tensions between the US and China just weeks after the two sides reached the surprise trade truce in Geneva, which significantly dialed down the hefty tariffs that each imposed on the other in April. That agreement gave the two sides a 90-day window to hash out a broader deal, an effort that now appears imperiled as each side accuses the other of working against the spirit of that agreement. US officials have described talks as 'stalled' and suggested that the involvement of Trump and Chinese leader Xi Jinping is needed to jumpstart progress. A key point of contention has been Beijing's export controls on rare earth minerals and associated products, which were imposed as part of its retaliation against Trump's 'reciprocal' tariffs on Chinese goods. Following the talks, US officials had expected China to ease export restrictions of those minerals, which are an essential part of everything from iPhones and electric vehicles to big-ticket weapons like F-35 fighter jets and missile systems. But the restrictions haven't been lifted, causing intense displeasure inside the Trump administration and prompting a recent series of measures imposed on China, three administration officials told CNN last week. Meanwhile, Beijing accused the US last month of 'undermining' the consensus reached in Geneva, after Washington warned companies against using AI chips made by its national tech champion Huawei. In a further escalation of tensions, the US then last week also moved to limit critical technology sales to China and restrict the number of Chinese students studying in the US –spotlighting how the scope of their competition is much broader than just trade. In the Monday statement, China's Commerce Ministry hit out at these measures, saying the US has 'successively introduced a number of discriminatory restrictive measures against China after the Geneva Economic and Trade Talks, including issuing AI chip export control guidelines, stopping the sale of chip design software to China, and announcing the revocation of Chinese student visas.' Beijing, as well as other Asian capitals, is also feeling the pressure of trade frictions at home. China's manufacturing activity shrank for a second month in May, an official survey showed on Saturday. Tariffs imposed this year on Chinese goods entering the US, its largest export market, currently stand at 30%, not including any pre-existing duties. Trump administration officials have homed in on China's controls on exports of rare earths in their assessments of China's compliance with the agreement reached in Geneva. The deal saw the two sides dial back during the 90-day grace period mutual tariffs that had soared to well over 100%. It also included an agreement from China to 'suspend or remove' non-tariff countermeasures taken against the US since April 2. China on April 4 imposed export controls on seven rare earth minerals and associated products in what was seen as a retaliation against Trump's duties on its goods. Its export control regime does not ban exports outright but requires government approval for each shipment regardless of destination, enabling greater control over a supply chain that China has come to dominate globally. That system appeared to remain in place last month following the talks, CNN reporting showed. During an interview that aired Sunday with CBS' Face the Nation, US Treasury Secretary Scott Bessent said China was 'withholding some of the products that they agreed to release' in Geneva, referring to critical minerals. 'Maybe it's a glitch in the Chinese system, maybe it's intentional,' he added, noting that the issue would be 'ironed out' when Trump and Chinese leader Xi Jinping have a call, which Bessent said he believes will happen 'very soon.' The two leaders are known to have last spoken on January 17, days before Trump's inauguration. China has defended its export control regime, describing it last week as 'in line with international practices' and 'not targeted at specific countries.' When asked about its export controls on rare earth minerals, part of a wider category of critical minerals, during a regular press briefing Friday, a spokesperson for China's Ministry of Foreign Affairs said Beijing was 'willing to strengthen dialogue and cooperation in the field of export controls with relevant countries and regions.'
CNN
3 days ago
- Business
- CNN
China says US is ‘provoking frictions' as tensions flare despite trade truce
China has accused the United States of 'provoking new economic and trade frictions' as it responded to US President Donald Trump's claims that Beijing had violated a trade truce agreed by the two nations last month, which paused their blistering tariff war. China was 'strictly implementing' the consensus of those trade talks, the Chinese Commerce Ministry said in a statement Monday, while blaming the US for taking steps that 'seriously undermine' the agreement. 'The United States has been unilaterally provoking new economic and trade frictions, exacerbating the uncertainty and instability of bilateral economic and trade relations,' the statement said. 'If the United States insists on its own way and continues to undermine China's interests, China will continue to take resolute and forceful measures to safeguard its legitimate rights and interests,' it added. The comments come after Trump on Friday said China had 'TOTALLY VIOLATED ITS AGREEMENT WITH US.' In a post on Truth Social, the US president said that he made a fast deal with China to 'save them from what I thought was going to be a very bad situation.' He added: 'So much for being Mr. NICE GUY!' The back and forth spotlights a ratcheting up of tensions between the US and China just weeks after the two sides reached the surprise trade truce in Geneva, which significantly dialed down the hefty tariffs that each imposed on the other in April. That agreement gave the two sides a 90-day window to hash out a broader deal, an effort that now appears imperiled as each side accuses the other of working against the spirit of that agreement. US officials have described talks as 'stalled' and suggested that the involvement of Trump and Chinese leader Xi Jinping is needed to jumpstart progress. A key point of contention has been Beijing's export controls on rare earth minerals and associated products, which were imposed as part of its retaliation against Trump's 'reciprocal' tariffs on Chinese goods. Following the talks, US officials had expected China to ease export restrictions of those minerals, which are an essential part of everything from iPhones and electric vehicles to big-ticket weapons like F-35 fighter jets and missile systems. But the restrictions haven't been lifted, causing intense displeasure inside the Trump administration and prompting a recent series of measures imposed on China, three administration officials told CNN last week. Meanwhile, Beijing accused the US last month of 'undermining' the consensus reached in Geneva, after Washington warned companies against using AI chips made by its national tech champion Huawei. In a further escalation of tensions, the US then last week also moved to limit critical technology sales to China and restrict the number of Chinese students studying in the US –spotlighting how the scope of their competition is much broader than just trade. In the Monday statement, China's Commerce Ministry hit out at these measures, saying the US has 'successively introduced a number of discriminatory restrictive measures against China after the Geneva Economic and Trade Talks, including issuing AI chip export control guidelines, stopping the sale of chip design software to China, and announcing the revocation of Chinese student visas.' Beijing, as well as other Asian capitals, is also feeling the pressure of trade frictions at home. China's manufacturing activity shrank for a second month in May, an official survey showed on Saturday. Tariffs imposed this year on Chinese goods entering the US, its largest export market, currently stand at 30%, not including any pre-existing duties. Trump administration officials have homed in on China's controls on exports of rare earths in their assessments of China's compliance with the agreement reached in Geneva. The deal saw the two sides dial back during the 90-day grace period mutual tariffs that had soared to well over 100%. It also included an agreement from China to 'suspend or remove' non-tariff countermeasures taken against the US since April 2. China on April 4 imposed export controls on seven rare earth minerals and associated products in what was seen as a retaliation against Trump's duties on its goods. Its export control regime does not ban exports outright but requires government approval for each shipment regardless of destination, enabling greater control over a supply chain that China has come to dominate globally. That system appeared to remain in place last month following the talks, CNN reporting showed. During an interview that aired Sunday with CBS' Face the Nation, US Treasury Secretary Scott Bessent said China was 'withholding some of the products that they agreed to release' in Geneva, referring to critical minerals. 'Maybe it's a glitch in the Chinese system, maybe it's intentional,' he added, noting that the issue would be 'ironed out' when Trump and Chinese leader Xi Jinping have a call, which Bessent said he believes will happen 'very soon.' The two leaders are known to have last spoken on January 17, days before Trump's inauguration. China has defended its export control regime, describing it last week as 'in line with international practices' and 'not targeted at specific countries.' When asked about its export controls on rare earth minerals, part of a wider category of critical minerals, during a regular press briefing Friday, a spokesperson for China's Ministry of Foreign Affairs said Beijing was 'willing to strengthen dialogue and cooperation in the field of export controls with relevant countries and regions.'
CNN
23-05-2025
- Business
- CNN
Analysis: Beijing sees a ‘victory' with the US tariffs truce. What's it aiming for next?
A surprise truce in a spiraling tariff war between the US and China last week was hailed by Chinese pundits as a success for the country. But Beijing is gearing up for a rocky path in relations, and negotiations, ahead. Already, in the days immediately following the May 12 agreement between American and Chinese negotiators in Geneva, Beijing has been lashing out at Washington. On Monday, China's Commerce Ministry accused the US of 'undermining' the Geneva talks after the Trump administration warned companies against using AI chips made by national tech champion Huawei. Two days later, it said Washington was 'abusing export controls to suppress and contain China' referring again to Trump guidelines on AI chips. Beijing has also stuck to its stance on fentanyl, calling the drug scourge the 'US's problem, not China's' — even as further collaboration with Washington on curbing the production of chemicals that can be used to make the drug could help Beijing whittle down remaining US tariffs on its goods. China's tough talk sends a clear signal ahead of expected negotiations: That even as Beijing stands to face major economic pain from trade frictions, it's in no mood for quick concessions at the expense of its own image or interests. It's also a reminder that despite the temporary dial down, an entrenched US-China strategic rivalry will cast a heavy shadow over those talks. Washington now views an increasingly assertive China as a threat and has moved to tighten controls on Chinese access to American tech and investment, while shoring up its Asian alliances — acts Beijing view as 'containment.' The clock is already ticking on trade negotiations, as the truce agreed by American and Chinese officials earlier this month lasts only 90 days. Under that deal, the two sides agreed to reduce by 115 percentage point tariffs that had amounted to a de facto trade embargo between two highly integrated economies — leaving assembly lines stalled, ports quieted and companies on both sides reeling with how to cope. There has been no announcement of further trade talks between the US and China, though US trade representative Jamieson Greer and Chinese trade envoy Li Chenggang met on the sidelines of a gathering of APEC trade ministers in South Korea last week, Reuters reported. On Friday, China's Ministry of Foreign Affairs said Vice Minister Ma Zhaoxu spoke with US State Department Deputy Secretary for Management and Resources Richard Verma on China-US relations. 'The revival of US-China trade ties benefits both sides and the global economy,' China's state broadcaster CCTV said amicably on May 14 when the reductions went into effect, taking a more modest tone than pundits like Hu Xijin, the former editor of a state-linked nationalist tabloid, who had called the outcome a 'huge victory' for China. But, CCTV added, the US must 'completely correct' its 'wrongdoing of making excuses to recklessly impose tariffs. Dialogue can begin, but hegemony must end.' When Trump announced so-called reciprocal duties on trade partners around the world last month, China took a different approach to most countries, swiftly retaliating with its own measures. And it didn't back down even when the US president then paused most duties on other countries but raised them on China, with Beijing projecting itself as a global leader standing up to a bully as their tit-for-tat tariffs spiraled higher. Now, Chinese leaders likely feel 'reassured that their US strategy is on the right track,' according to geopolitical strategist Brian Wong, an assistant professor at the University of Hong Kong. But the question for Beijing is how to spin that into a lasting victory for its economy — and its narrative, despite a deep mutual mistrust and mounting US-China competition in tech, military prowess and global influence, not to mention a president known for his brash policymaking. 'There is absolutely no delusion on the part of (China's) senior decision makers concerning … an easing of Sino-American tensions,' said Wong. The stakes are high for China to make sure tariffs are reduced for its single largest export market - and don't ratchet back up. If the current reduced duties remain in place, US-China trade could be cut by half, reducing China's growth by 1.6% and leading to four to six million job losses, according to chief Asia-Pacific economist Alicia Garcia Herrero at Natixis, an investment bank. The Trump administration has yet to lay out a clear set of demands for negotiations with China, but the president has long railed against the US's roughly $300 billion trade deficit with China and blamed the country for the offshoring of American jobs and decline of US manufacturing. Despite its tough talk, observers say Beijing is likely prepared to make some concessions. That could include returning to or expanding on a trade agreement to buy more US goods reached during Trump's first trade war, which was never fully implemented. Law enforcement collaboration or tighter controls on the production of precursor chemicals used to make fentanyl could be another. 'The Chinese are willing to make deals, in order to weather the storm called Trump,' said Yun Sun, director of the China program at the Stimson Center think tank in Washington. 'If there is a way they can minimize the cost and stabilize bilateral relations … that is preferred. But they want US to be practical and reasonable.' There are clear friction points. Beijing would likely want to work toward closing the trade gap by buying high end American technology, much of which is now banned for sale there. Chinese officials may also be wary of negotiating too broadly with Trump's team and giving concessions connected to opening its economic system, which Western countries have long been calling for. But Beijing also has its own leverage, as it appears to continue to keep tight control over its rare earth exports that are critical to automobile, aerospace and military industries. And observers see China as more able to withstand economic pain than the US. That's partly because Chinese leader Xi Jinping, a strongman atop a tightly controlled Communist Party system, isn't vulnerable in the same way as Trump to public backlash over economic pain and tanking stock prices. 'Although the effects of the tariffs on China's economy will become sharper, Beijing believes that it can endure the trade war longer than the United States can,' former Chinese diplomat Zhou Xiaoming wrote in an online analysis earlier this month ahead of the Geneva talks. Where negotiations land by August 12, when the 90-day window closes, will have a major impact on the broader trajectory of relations between the rival global powers. But in the meantime, Beijing is continuing to prepare for a long-term rupture with the US. Trade tensions have added urgency to China's twin drives to boost domestic consumption and expand other export markets as the government looks for ways to offset the potential loss of American customers. Xi and his officials have launched a flurry of diplomacy targeting partners from Latin America to Europe and Southeast Asia projecting China as a responsible partner – and offering to bolster cooperation or expand free trade. Beijing has done 'brilliantly' in this regard, according to Suisheng Zhao, director of the Center for China-US Cooperation at Josef Korbel School of International Studies in Denver. 'If Trump continues this (global) tariff war, that will give a lot of strategic advantage to China.' And that's important for Beijing, he added, because regardless of what happens in the next 90 days, the broader US-China rivalry means both hope to become less reliant on the other. 'It doesn't matter what they talk about (in negotiations) … they'd (each) rather reduce their trade with the other – that's the trend,' he said. CNN's Joyce Jiang contributed to this report.
CNN
23-05-2025
- Business
- CNN
Analysis: Beijing sees a ‘victory' with the US tariffs truce. What's it aiming for next?
A surprise truce in a spiraling tariff war between the US and China last week was hailed by Chinese pundits as a success for the country. But Beijing is gearing up for a rocky path in relations, and negotiations, ahead. Already, in the days immediately following the May 12 agreement between American and Chinese negotiators in Geneva, Beijing has been lashing out at Washington. On Monday, China's Commerce Ministry accused the US of 'undermining' the Geneva talks after the Trump administration warned companies against using AI chips made by national tech champion Huawei. Two days later, it said Washington was 'abusing export controls to suppress and contain China' referring again to Trump guidelines on AI chips. Beijing has also stuck to its stance on fentanyl, calling the drug scourge the 'US's problem, not China's' — even as further collaboration with Washington on curbing the production of chemicals that can be used to make the drug could help Beijing whittle down remaining US tariffs on its goods. China's tough talk sends a clear signal ahead of expected negotiations: That even as Beijing stands to face major economic pain from trade frictions, it's in no mood for quick concessions at the expense of its own image or interests. It's also a reminder that despite the temporary dial down, an entrenched US-China strategic rivalry will cast a heavy shadow over those talks. Washington now views an increasingly assertive China as a threat and has moved to tighten controls on Chinese access to American tech and investment, while shoring up its Asian alliances — acts Beijing view as 'containment.' The clock is already ticking on trade negotiations, as the truce agreed by American and Chinese officials earlier this month lasts only 90 days. Under that deal, the two sides agreed to reduce by 115 percentage point tariffs that had amounted to a de facto trade embargo between two highly integrated economies — leaving assembly lines stalled, ports quieted and companies on both sides reeling with how to cope. There has been no announcement of further trade talks between the US and China, though US trade representative Jamieson Greer and Chinese trade envoy Li Chenggang met on the sidelines of a gathering of APEC trade ministers in South Korea last week, Reuters reported. On Friday, China's Ministry of Foreign Affairs said Vice Minister Ma Zhaoxu spoke with US State Department Deputy Secretary for Management and Resources Richard Verma on China-US relations. 'The revival of US-China trade ties benefits both sides and the global economy,' China's state broadcaster CCTV said amicably on May 14 when the reductions went into effect, taking a more modest tone than pundits like Hu Xijin, the former editor of a state-linked nationalist tabloid, who had called the outcome a 'huge victory' for China. But, CCTV added, the US must 'completely correct' its 'wrongdoing of making excuses to recklessly impose tariffs. Dialogue can begin, but hegemony must end.' When Trump announced so-called reciprocal duties on trade partners around the world last month, China took a different approach to most countries, swiftly retaliating with its own measures. And it didn't back down even when the US president then paused most duties on other countries but raised them on China, with Beijing projecting itself as a global leader standing up to a bully as their tit-for-tat tariffs spiraled higher. Now, Chinese leaders likely feel 'reassured that their US strategy is on the right track,' according to geopolitical strategist Brian Wong, an assistant professor at the University of Hong Kong. But the question for Beijing is how to spin that into a lasting victory for its economy — and its narrative, despite a deep mutual mistrust and mounting US-China competition in tech, military prowess and global influence, not to mention a president known for his brash policymaking. 'There is absolutely no delusion on the part of (China's) senior decision makers concerning … an easing of Sino-American tensions,' said Wong. The stakes are high for China to make sure tariffs are reduced for its single largest export market - and don't ratchet back up. If the current reduced duties remain in place, US-China trade could be cut by half, reducing China's growth by 1.6% and leading to four to six million job losses, according to chief Asia-Pacific economist Alicia Garcia Herrero at Natixis, an investment bank. The Trump administration has yet to lay out a clear set of demands for negotiations with China, but the president has long railed against the US's roughly $300 billion trade deficit with China and blamed the country for the offshoring of American jobs and decline of US manufacturing. Despite its tough talk, observers say Beijing is likely prepared to make some concessions. That could include returning to or expanding on a trade agreement to buy more US goods reached during Trump's first trade war, which was never fully implemented. Law enforcement collaboration or tighter controls on the production of precursor chemicals used to make fentanyl could be another. 'The Chinese are willing to make deals, in order to weather the storm called Trump,' said Yun Sun, director of the China program at the Stimson Center think tank in Washington. 'If there is a way they can minimize the cost and stabilize bilateral relations … that is preferred. But they want US to be practical and reasonable.' There are clear friction points. Beijing would likely want to work toward closing the trade gap by buying high end American technology, much of which is now banned for sale there. Chinese officials may also be wary of negotiating too broadly with Trump's team and giving concessions connected to opening its economic system, which Western countries have long been calling for. But Beijing also has its own leverage, as it appears to continue to keep tight control over its rare earth exports that are critical to automobile, aerospace and military industries. And observers see China as more able to withstand economic pain than the US. That's partly because Chinese leader Xi Jinping, a strongman atop a tightly controlled Communist Party system, isn't vulnerable in the same way as Trump to public backlash over economic pain and tanking stock prices. 'Although the effects of the tariffs on China's economy will become sharper, Beijing believes that it can endure the trade war longer than the United States can,' former Chinese diplomat Zhou Xiaoming wrote in an online analysis earlier this month ahead of the Geneva talks. Where negotiations land by August 12, when the 90-day window closes, will have a major impact on the broader trajectory of relations between the rival global powers. But in the meantime, Beijing is continuing to prepare for a long-term rupture with the US. Trade tensions have added urgency to China's twin drives to boost domestic consumption and expand other export markets as the government looks for ways to offset the potential loss of American customers. Xi and his officials have launched a flurry of diplomacy targeting partners from Latin America to Europe and Southeast Asia projecting China as a responsible partner – and offering to bolster cooperation or expand free trade. Beijing has done 'brilliantly' in this regard, according to Suisheng Zhao, director of the Center for China-US Cooperation at Josef Korbel School of International Studies in Denver. 'If Trump continues this (global) tariff war, that will give a lot of strategic advantage to China.' And that's important for Beijing, he added, because regardless of what happens in the next 90 days, the broader US-China rivalry means both hope to become less reliant on the other. 'It doesn't matter what they talk about (in negotiations) … they'd (each) rather reduce their trade with the other – that's the trend,' he said. CNN's Joyce Jiang contributed to this report.
