Donald Trump has proposed a significant reduction in U.S. trade tariffs on China, suggesting they could be cut to 80%. This announcement comes ahead of important peace talks between the two nations in Switzerland. The meeting, involving top officials from both countries, is seen as a chance to ease the ongoing trade war, which has had serious consequences for both economies.
The talks are particularly crucial as both nations face economic challenges. Trump shared his thoughts on his Truth Social platform, indicating that this 80% tariff could be a reasonable figure. The decision will ultimately rest with Scott Bessent, the U.S. Treasury Secretary, who is leading the American delegation in Geneva.
Currently, tariffs on U.S. imports to China stand at an alarming 125%, while Chinese goods entering the U.S. face tariffs of 145%. These high rates have created a situation that resembles a trade embargo, making trade between the two countries extremely difficult. Even with an 80% tariff, trade would still be heavily restricted.
The anticipation surrounding the talks has had a positive impact on financial markets, with the U.S. dollar and global stock prices rising. Investors are eager for a resolution, as the ongoing trade disputes have already led to rising prices and supply chain issues. In fact, the U.S. economy saw a contraction in the first quarter of the year, largely due to trade tensions. The Federal Reserve has also refrained from cutting interest rates, citing concerns that tariffs will keep inflation high.
China, on its end, has not yet shown significant economic distress in official data, but surveys indicate that factory orders are declining. In response, the Chinese central bank has cut interest rates and eased reserve requirements to stimulate lending and support manufacturers.
As the talks approach, China has expressed that it expects the U.S. to make the first move toward concessions. The Chinese delegation is led by Vice Premier He Lifeng, known for his negotiation skills. A spokesperson for China’s commerce ministry emphasized that the decision to engage in talks was made after careful consideration of global expectations and the interests of both Chinese and U.S. businesses.
White House economic adviser Kevin Hassett remarked that the atmosphere of respect and collegiality during the discussions is promising. Both sides hope that these negotiations will lead to a cooling of trade hostilities and a more stable economic relationship moving forward.