US and China meet in bid to ‘de-escalate’ trade war

GENEVA – Senior US and Chinese officials met in Geneva on May 10 in a bid to de-escalate a trade war sparked by President Donald Trump’s sweeping tariff roll-out and further fuelled by Beijing’s strong retaliation.

US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer conferred with China’s Vice-Premier He Lifeng in the first such talks between the world’s two largest economies since Mr Trump slapped steep new tariffs on China in April.

The closed-door discussions began at mid-morning on May 10 and were due to continue on May 11 at the residence of the Swiss ambassador to the United Nations in Geneva.

And after a break at around lunchtime, the delegations returned to the discreet villa with sky blue shutters near a large park on the left bank of Lake Geneva, according to AFP journalists on site.

Tariffs imposed by Mr Trump on the Asian manufacturing giant since the start of 2025 currently total 145 per cent, with cumulative duties on some goods reaching a staggering 245 per cent.

In retaliation, China slapped 125 per cent tariffs on US goods, cementing what is effectively a trade embargo between the world’s two largest economies.

Mr Trump signalled on May 9 that he could lower the sky-high tariffs on Chinese imports, taking to social media to suggest that an

“80 per cent Tariff on China seems right!”

“The President would like to work it out with China... He would like to de-escalate the situation,” US Commerce Secretary Howard Lutnick told Fox News on May 9.

Mr Trump’s press secretary Karoline Leavitt clarified that the US would not lower tariffs unilaterally, adding that China would need to make concessions as well.

In any case, a move to 80 per cent tariffs, while a big drop from the current 145 per cent, would be a symbolic gesture and would still most likely shut off most trade between the countries.

‘A good sign’

The negotiations will be watched closely by economists and investors, who fear that a US-China economic war will lead to slower growth and higher prices around the world.

Businesses, particularly those that rely on Chinese imports, are also on high alert about the talks as they grapple with how to cope with the new taxes and the uncertainty about whether they will remain in place.

The trade fight has started to take a toll on the world’s largest economies.

On May 9, China reported that its exports to the US in April dropped 21 per cent from a year earlier. Some of the largest US companies have said they will have to raise prices to deal with the tariffs, going against Mr Trump’s promise to “end” inflation.

“The relationship is not good,” said Mr Bill Reinsch, a senior adviser at the Centre for Strategic and International Studies, referring to ties between Washington and Beijing.

“We have trade-prohibitive tariffs going in both directions. Relations are deteriorating,” said Mr Reinsch, a long-time former member of the American government’s US-China Economic and Security Review Commission.

“But the meeting is a good sign.”

“I think this is basically to show that both sides are talking, and that itself is very important,” economics and finance professor Xu Bin of the China Europe International Business School told AFP.

“Because China is the only country that has tit-for-tat tariffs against Trump’s tariffs.”

Beijing has insisted the US must lift tariffs first and vowed to defend its interests.

“This tariff war was launched by the US side,” Mr Liu Pengyu, spokesman for the Chinese Embassy in Washington, said last week.

“If the US genuinely wants a negotiated solution, it should stop making threats and exerting pressure, and engage in talks with China on the basis of equality, mutual respect and mutual benefit.”

Reuters reported that Swiss Economy Minister Guy Parmelin met both parties in Geneva on May 9 and said the fact that the talks were taking place was already a success.

“If a road map can emerge and they decide to continue discussions, that will lower the tensions,” he told reporters on May 9, saying talks could continue even into May 12.

The head of the Geneva-based World Trade Organisation (WTO) on May 9 welcomed the talks, calling them a “positive and constructive step towards de-escalation”.

“Sustained dialogue between the world’s two largest economies is critical to easing trade tensions, preventing fragmentation along geopolitical lines and safeguarding global growth,” WTO director-general Ngozi Okonjo-Iweala said, according to a spokesperson.

10 per cent ‘baseline’

China’s Vice-President went into the discussions buoyed by news on May 9 that China’s exports rose in April despite the trade war.

The unexpected development was attributed by experts to a re-routing of trade to South-east Asia to mitigate US tariffs.

Mr Bessent and Mr He are meeting two days after Mr Trump unveiled a trade agreement with Britain, the first deal with any country since he unleashed a blitz of sweeping global tariffs in April.

The five-page, non-legally-binding document confirmed to nervous investors that the US is willing to negotiate sector-specific relief from recent duties – in this case on British cars, steel and aluminium.

In return, Britain agreed to open up its markets to US beef and other farm products.

But a 10 per cent baseline levy on most British goods remained intact, and Mr Trump remains “committed” to keeping it in place for other countries in talks with the US, Ms Leavitt told reporters on May 9.

A few hours later, Mr Trump appeared to contradict her, suggesting there could be some flexibility to the baseline – but only if the right deals could be reached.

“There could be an exception at some point, we’ll see,” he said during an Oval Office event. “If somebody did something exceptional for us, that’s always possible.”

Mr Reinsch said a big issue for the US and China going into the talks in Geneva was their starkly different negotiating strategies.

“Trump’s approach is generally top-down,” he said. “He wants to meet with (Chinese President) Xi Jinping, and thinks that if the two of them can get together, they can make a big deal and then have the subordinates go work out the details.”

“The Chinese are the reverse,” he added. “They want to have all the issues settled and everything agreed to at lower levels before there’s any leaders’ meeting.” AFP