US, China meet for high-stakes economic talks

Top U.S. and Chinese economic officials are set to meet in Geneva on Saturday for high-stakes talks that could determine the fate of a global economy that has been battered by President Donald Trump 's trade war.

The meetings, scheduled to continue through Sunday, will be the first since Trump raised tariffs on Chinese imports to 145% and China retaliated with its own 125% tariffs on U.S. goods. The give-and-take has effectively cut off trade between the world’s largest economies while raising the prospect of a global economic recession.

While the stakes for the meetings are high, expectations for a breakthrough that could result in a significant reduction in tariffs are low. It took weeks for China and the United States to even agree to talk, and many analysts expect this weekend’s discussions to revolve around determining what each side wants and how negotiations could move forward.

Still, the fact that Beijing and Washington are finally talking has raised hopes that tensions between them could be eased and that the tariffs could ultimately be reduced. The impact of the tariffs is already rippling through the global economy, reorienting supply chains and causing companies to pass on additional costs to consumers.

The negotiations will be closely watched by economists and investors, who fear that an economic war between the U.S. and China could lead to slower growth and higher prices around the world. Companies, particularly those that rely on Chinese imports, are also on high alert over the talks as they grapple with how to adapt to the new taxes and uncertainty over whether they will remain in place.

“The US and China have strong economic and financial interests in de-escalating their trade hostilities, but a lasting détente is hardly in sight,” said Eswar Prasad, former director of the China division at the International Monetary Fund.

"However," he added, "it represents significant progress that the two sides are at least beginning high-level negotiations, offering hope that they will moderate their rhetoric and back off hostilities on trade and other aspects of their economic relationship."

The Trump administration’s negotiators are led by Treasury Secretary Scott Bessent, a former hedge fund manager who has said current tariff levels are unsustainable. He will be joined by Jamieson Greer, the U.S. trade representative who helped craft Trump’s first-term trade agenda that included a “Phase 1” deal with China. Trump’s hardline trade adviser, Peter Navarro, was not scheduled to participate in the talks.

He Lifeng, China’s vice premier for economic policy, is leading the talks on Beijing’s behalf. The Chinese government has not confirmed who else will be with He at the meetings or whether Wang Xiaohong, China’s public security minister who heads its narcotics control commission, will participate. Wang’s participation would be a signal that the two sides may discuss Trump’s concerns about China’s role in facilitating the trafficking of fentanyl to the United States.

The trade war has begun to affect the world’s largest economies. On Friday, China reported that its exports to the United States in April fell 21% from a year earlier. Some of the largest U.S. companies have said they will have to raise prices to deal with the tariffs, contradicting Trump’s promise to “end” inflation.

On Friday, Trump signaled that he was prepared to begin rolling back tariffs, suggesting that an 80% levy on Chinese imports seemed appropriate. Later, referring to trade negotiations with China, Trump said, “We have to make a great deal for America.” He added that he would not be disappointed if a deal was not reached immediately, arguing that no deal is also a good deal for the United States.

The president also reiterated that he had suggested lowering China's tariffs to 80 percent, adding: "We'll see how that works."

The Trump administration has accused China of unfairly subsidizing key sectors of its economy and flooding the world with cheap goods. The United States has also been pressing China to take more aggressive steps to curb exports of fentanyl precursors, a drug that has killed millions of Americans. /NYT