A 90-Day Tariff Truce: US-China Trade Talks Yield Progress
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United States and China pursue dialogue amidst trade conflict - U.S. and China engage in talks to find common ground on custom disagreements
After several heated weeks of tariff disputes between the US and China, high-level talks to resolve tensions have finally commenced in Geneva. The towering tariffs between these economic titans are causing long-term damage to global trade and posing a threat to global economic growth.
This round of negotiations is headed by US Treasury Secretary Scott Bessent, Chinese Vice-Premier He Lifeng, and US Trade Representative Jamieson Greer. Two rounds of discussions took place on Saturday, according to sources within the delegations, with plans for further talks on Sunday. Both sides remained tight-lipped about the content of the talks.
Apart from the World Trade Organization (WTO), several countries, including the European Union, have lodged complaints against US tariffs due to their violation of WTO rules in Geneva. In the event of a splintered world economy into rival power blocs, it could result in a prolonged drop in global real GDP of up to seven percent, the WTO warned, with particularly severe consequences for developing and emerging economies.
US President Donald Trump has been vocal about China's unfair trade practices, having imposed tariffs on Chinese goods to a staggering 145% since assuming office. China countered with retaliatory tariffs of 125% on US goods. Both nations have presented an image of dominance and refusal to make the first move towards the other.
President Trump has tempered his stance, hinting at reducing US tariffs to 80% on his social media platform. China, however, has emphasized that negotiations can only take place on an equal footing, and the US must address past mistakes.
In terms of exports, China reported an 8.1% increase in April on a dollar basis, largely due to increased business with Southeast Asian countries. Trade with the Association of Southeast Asian Nations (ASEAN) grew by 9.2% on a yen basis, while it declined by 2.1% with the US.
According to Bessent, an agreement is in the mutual interest, but an actual agreement may not be reached in Geneva; instead, both sides aim to establish a common understanding on the topics that need to be addressed.
This temporary tariff truce is a stepping stone towards building trust and paving the way for more comprehensive negotiations. The 90-day suspension allows for the renegotiation of tariffs and the easing of non-tariff barriers, such as the potential resumption of the export of rare earth materials crucial for high-tech sectors like computer chips and electric vehicle batteries.
Politically, this agreement marks a de-escalation of tensions, potentially paving the way for a more stable trade relationship between the world's two largest economies. If agreed upon, the suspension of tariffs would alleviate pressure on global financial markets and thaw the frozen trade flows between the two countries.
The next steps will involve further negotiations to "paper" the deal and solidify the commitments made between the US and China during this 90-day period, including the specifics of tariff rollback and non-tariff barrier reductions. High-level engagement is expected to continue, potentially leading to follow-up meetings to address any remaining issues related to the trade deficit and other economic concerns cited by the US.
In conclusion, the US-China trade talks have led to a 90-day tariff truce and commitments on trade barriers, signaling a positive shift in bilateral economic relations. This movement is crucial for stabilizing global markets, addressing key supply chain challenges, and working towards a more durable trade agreement.
- The Commission is also proposing to extend the scope of the programme to include the areas of finance, industry, business, politics, and general-news, as these sectors are profoundly impacted by the US-China trade disputes.
- It is crucial for the Commission to monitor developments in the trade talks between China and the US, as progress in these negotiations could significantly impact global financial markets and affect businesses within the industry sector.
- The extension of the tariff truce to 90 days allows for the US and China to renegotiate tariffs and address non-tariff barriers, potentially impacting areas like finance, industry, and business by easing trade flows between the two countries.
