Navigating the UK trade deal was a relatively straightforward endeavor; the road ahead with China promises exponentially greater challenges.

Grabbing a Seat at the Table: US-China Trade Talks in Geneva

With the Trump administration set to engage in negotiations with Chinese officials in Geneva, it's tempting to believe the positive vibes from the UK trade deal announcement might carry over. But let's keep our expectations in check - high tariffs, tense relationships, and a contentious history aren't easy to unwind.

Wendy Cutler,former US trade negotiator and vice president of the Asia Society Policy Institute, puts it plainly: "Tariffs are high. Tensions are high. It's easier to impose tariffs than to unwind them."

President Donald Trump's disdain for trade deficits - a situation where the US buys more from another country than it sells - is no secret. His belief that it's a sign of America being "ripped off" and treated unfairly isn't widely shared by economists, though.

Given China's status as the world's second-largest economy and a manufacturing powerhouse, it's no surprise that, across all trading partners, the US ran the largest trade deficit with Beijing last year, totaling nearly $300 billion.

Trump has imposed the steepest tariffs on China, with rates starting at a staggering 145% for most products. China retaliated by slapping a minimum tariff of 125% on most US goods. Both countries' economies stand to take a significant hit from the trade war, and the wounds are already starting to show.

Investors and businesses from both countries desperately want to see an improvement in the situation and are keeping their fingers crossed that the weekend talks, marking the first official dialogue between top US and Chinese government officials during Trump's second term, will make a difference. But it could just as easily take a turn for the worse.

The UK Deal: A Foot in the Door but No Silver Bullet

Cutler predicts 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 demonstrate their strategy's effectiveness and to show that other countries have concerns with China.

The details of the UK deal, however, reveal it's a relatively small win - if it's a win at all. It's also an agreement that was relatively straightforward to negotiate. The UK had less to give up, with tariffs on its exports starting at 10%, remaining at that level even after the "deal." Some cars from the UK are getting a slight break on tariffs, and the Trump administration seems open to other carve-outs. 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 Desired Outcome

Very few believe that this initial round of talks will bring US and Chinese tariffs back to where they were before Trump's second term. Bessent himself 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 himself admitted on Wednesday that he wouldn't consider lowering tariffs to get China to the negotiating table. However, 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.

It's a positive sign that Trump said on Thursday he wasn't considering imposing 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 caught the attention of 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 extreme level of tariffs, this decoupling, 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 are acting more cautiously compared to past talks with the US, Shirk notes. This suggests to her that "they're not likely to mess it up."

"They're skeptical of Trump," Shirk said, "and so they're going to be very careful, which I think puts the right kind of pressure on President Trump."

Shirk is hoping that 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 left with "a process for further engagement," she said. Key among those would be getting the ball rolling on a call between Trump and Xi.

Trump suggested he might consider speaking with Xi depending on how the weekend talks go.

The Worst Possible Outcome

On the flip side, the possibilities for how bad things could get and the actions both governments could take are endless. Both Cutler and Shirk agreed that one of the worst-case scenarios would echo the 2021 talks between Biden administration officials and Chinese officials in Alaska.

That quickly escalated into a heated exchange, with officials lashing out at each other using harsh rhetoric in front of a barrage of journalists invited to cover what was intended to be brief opening remarks.

"The worst thing that could happen is a big blowup," Shirk said, "and the media is there to report it."

"That's exactly the type of meeting one wants to avoid," said Cutler, who also served as acting deputy USTR in the Obama administration.

Aside from Alaska, the worst possible outcome, according to Cutler, is for the US and China to "dig in their heels and not find common ground to move forward," which would pave the way for even higher tariffs to be imposed.

The US-China trade talks in Geneva, set for this weekend, serve as a battleground for policy and legislation in the realm of politics and general news. The negotiations come with the unsurprising reality of high tariffs and tense relationships between the two nations. The UK trade deal announcement may offer a glimmer of hope, but expectations should be tempered, given the contentious history.

The UK deal, while potentially a step forward, is not a silver bullet. It is a relatively small win, with trade deficits still high and tariffs remaining at 10% for most exports. The US, however, ran a $12 billion trade surplus with the UK last year.

The desired outcome of the talks is de-escalation, as suggested by Treasury Secretary Steven Mnuchin. Susan Shirk, a research professor at UC San Diego, echoes this sentiment, believing that China is demonstrating a good faith effort to reduce trade deficits and is careful not to "mess it up."

If the talks go awry, the worst-case scenario could resemble the 2021 talks between Biden administration officials and Chinese officials in Alaska, marked by a heated exchange and the use of harsh rhetoric. Wendy Cutler, former US trade negotiator, warns of the potential for both sides to dig in their heels and fail to find common ground, paving the way for even higher tariffs.

Investors and businesses from both countries are keeping their fingers crossed, eager for an improvement in the current situation and hoping that this initial round of talks will lead to a process for further engagement, perhaps culminating in a conversation between President Trump and Chinese President Xi Jinping.

Navigating the UK trade deal was a relatively straightforward endeavor; the road ahead with China promises exponentially greater challenges.